Glassnoser
10d ago
A sales tax is a tax on consumption. A capital gains tax is a tax on capital. Taxing capital is taxing savings. It is not really taxing wealth, because an equally rich person who spends his money right away avoids it. It is actually easier to just tax consumption with a sales tax and then you can tax extreme wealth but in a way that is fair and doesn't discourage saving and investing.
The capital gains tax is especially absurd (compared to other taxes on capital) because it not only penalizes saving but also penalizes frequently selling assets, and the tax is on the nominal returns, not the real returns. If you invest in government bonds, your real tax after-tax return will be negative.
Scott Sumner is excellent on this subject and has written many blog posts on it. It's hard to pick the best one, but you should read a few. Here are some:
https://www.themoneyillusion.com/a-consumption-tax-is-a-wealth-tax/
https://www.econlib.org/capital-gains-nonsense/
https://www.themoneyillusion.com/income-a-meaningless-misleading-and-pernicious-concept/
Glassnoser
28d ago
A lot of problems with the American healthcare system seem to be caused by the fact that so much of it is paid for with insurance. Insurance is for catastrophes that are unlikely to happen. Most people should never file an insurance claim in their lives. The fact that it's used for things like having a baby is absurd.
Glassnoser
18d ago
I can't tell how much of this is a joke.
Glassnoser
9d ago
In Canada, your estate would have to pay a tax on 50% of the $999 capital gain before your heir inherited anything.
Glassnoser
9d ago
Your capital gains is a return on after-tax income. You don't pay almost nothing in taxes. You pay the same amount of taxes as anyone else who earned that same amount of money.
Or the billionaires who just take out margin loans forever, then pass it all on to their heirs, who then get a stepped up basis with no capital gains.
What do you mean? What are you talking about? Why wouldn't they have to pay capital gains?
Glassnoser
26d ago
You do get people advocating for specific popular policies that they think are obviously good, and when they don't see politicians doing enacting them, they assume they must be corrupt. For example, in Canada, there is a strong push right now to ban AirBnb completely or to ban corporations from owning houses, or even to ban anyone from owning multiple properties such that renters would only be allowed to rent from government owned housing or co-ops. Whenever these ideas come out on social media, the support to opposition ratio is easily 100:1.
Whenever there is any discussion about why these policies are not being enacted, there is always agreement that the problem is that politicians either don't care about the people or that they have investment interests that they're trying to protect. They never consider that some people might think their ideas won't work.
Politicians could maybe avoid this problem by increasing the housing supply, but if there are any problems with housing at all, then there will be a lot of outrage directed at them for not enacting these specific policies. I read a paper once that argued that this is South America's problem. There are lots of educated people who know that their policies are terrible, but the electorate has so little trust in politicians, that in order to get elected, you need to promise to enact these populist measures. In the West, the electorate tolerates the political class not doing exactly what they want because they have a certain level of trust.
I'm going on a 3.5 hour drive tomorrow to get to the centre of the path of totality for the solar eclipse. I have the solar glasses. I have solar binoculars and regular binoculars. I know about shadow bands and am thinking of bringing something to make them easier to see. Is there anything else I should do to take full advantage of it that I'm probably not thinking of? How hard are shadow bands to see? I saw videos of people using white sheets to see them. I'll probably be on a beach if that matters.
UPDATE: I saw the shadow bands in the snow. They were very faint at first but very clear right before the eclipse. Overall, an amazing experience and totally worth the trip. It's hard to describe the impression it made. A few minutes before the eclipse, it got noticeably darker, slowly at first and then faster and faster. Then, very quickly, it's as dark as night with a full moon, and you can suddenly see this back orb where sun was a moment ago, ringed with bright light and extraordinary white whisps of still smoke coming out of it. I am not a religious person, but angelic is best descriptor that comes to mind.
Glassnoser
3d ago
Phone apps are getting really aggressive lately about constantly sending useless notifications. They make it extremely difficult to figure out how to turn them off if they even let you. Threads is especially bad about this. Is there a guide somewhere on how to disable notifications?
The more general problem I've been having lately is that settings menus are now totally unintuitive. I used to be able to find something by just looking through the menu, but now, no matter what aim looking for, I almost always have to Google it, and half the time the instructions will be wrong because the app developers seem to reorganize their menus at least once a year.
Why do they do this? I get far more utility out of the layout of an app staying the same than I do out of any design changes, usually.
Glassnoser
8d ago
The average person blames things like foreign buyers, investors, and AirBnb which have almost no effect on property values, instead of high labour costs and regulations that restrict housing supply.
Glassnoser
9d ago
Taxing capital gains is not a way of avoiding taxing labour. The capital gain is a return on an initial investment that was earned with labour. Taxing it is taxing labour, just in a way that creates a deadweight loss by taxing someone who saves more than someone who spends. You get all of the deadweight loss of taxing labour and then some.
In my third link, Scott Sumner directly addresses the point about inequality. Taxing capital gains doesn't reduce inequality. The two brothers in his example are equally wealthy. But one chooses to invest his wealth and the other chooses to spend it. The fact that the one who invests it earns a capital gain does not mean he is wealthier. His brother had the same opportunity and didn't take it because he valued earlier consumption over later consumption. Claiming there is a difference in equality is just like claiming there is a difference inequality between someone who bought watermelon and someone who bought blueberries.
The author is saying the current privileged mix of taxing investments less than labor income isn't good enough, that we should institute massive taxes on labor to reduce all taxes from investments to 0.
He's not saying that at all. You've completely misunderstood. You should read the articles more carefully because he directly addresses this kind of argument.
Glassnoser
8d ago
One issue that I've heard from friends and relatives who have had to hire contractors lately for construction and renovation work is that they are extremely unreliable. They will just drop a job at the last minute even though they agreed to do it and the rest of the project depends on them doing it. This has caused people to have to scramble at the last minute and go around begging people to help them out or it has delayed projects by months.
He's not trying to smuggle a plan for the rich. Read the part where he advocates for a progressive consumption tax again.
At this point you might be thinking “Yes, but wouldn’t eliminating all income and consumption taxes be a giveaway to the rich?” No, it would be restoring fairness by taxing the thrifty and spendthrift at equal rates. If we think the rich should pay more tax, then let’s put a progressive consumption tax into effect. This is easy to do, just turn the regressive FICA into a progressive payroll tax, with much higher rates for those with high wages and salaries. This sort of tax can achieve any desired degree of progressivity. Unlike most libertarians, I think a progressive payroll tax is desirable for simple utilitarian reasons.
He is explaining that there is no reason to tax capital gains if your goal is to reduce inequality. From the second article:
What “principle” suggests that patient people should be taxed at higher rates than impatient people—even if they have the same lifetime wealth?
Your only answer that seems to be that they have different wealth, which he explains is not true, so what reason remains for taxing capital gains?
As for what is wrong with discouraging saving, he never says that saving is inherently good. He gives a very clear and specific reason for why it's bad to discourage saving.
The inheritance tax discourages saving, and thus reduces the capital stock. This lowers the real wage of workers who work with physical capital.
This one may clarify a few things.
Glassnoser
26d ago
I see the job of a politician in a democracy as trying to enact the best policies possible under the constraint of needing to get elected. If they did whatever the people wanted, it would lead to disaster, and they'd probably actually be voted out because of it.
Glassnoser
3d ago
No, it's a Pixel 6 Pro.
Glassnoser
8d ago
I think you're imagining someone with a greater future housing need than what they have already paid for while my point is that Canadians, on average own more housing than what they need. This necessarily true because of the fact that homeowners and landlords are disprortionately Canadian while renters are disproportionately foreigners.
The boomers also have parents who own or owned property they inherited part of and they also own investment properties or REITs.
Glassnoser
8d ago
There is no reason why it has to be delayed. The parents can sell at any time.
We are talking about housing affordability? What do you mean I'm being too materialistic? If materialism doesn't matter, why complain about high housing prices or a reduced standard of living?
Glassnoser
8d ago
Yes, there is no reason why am increase in property values should mean an increase in property taxes. Cities don't need more money just because property values are higher. They should fall and as a percentage of property values when property values rise.
Glassnoser
9d ago
They don't have to wait for their parents to die. Their parents can sell their homes or take out mortgages. Yes, if you have siblings, your parents have an above average number of children and you are probably not coming out ahead in this system, but the average Canadian does.
Glassnoser
9d ago
No, I think many want a racially white society where there is a substantial reduction in the non-white population and immigration restrictions based on race. For example, I've heard proposals to split the United States up so that part of it can be a white ethno-state and another part can be given to blacks. To achieve that, you do have to actually define who is white.
I used to argue with white nationalists a lot many years ago on /r/anarcho_capitalism and what I found very frustrating is they refused to properly defend their point of view, particularly on the point of who counted as white. The rare time they would say, it was usually strictly people born on the European continent, so Turks in East Thrace were white but not Turks on the other side of the Bosporus strait were not, I guess. Attempts to pin them down on definitions like this were taken as bad faith tricks to undermine their cause and there was not a lot of interest in having real intellectual discussion about the merits of white nationalism. I found I could get them to explain why they thought whites were superior to non-whites, but I could not get anywhere discussing the practicalities of how a white ethno-state would work.
I completely agree that it makes more sense to select immigrants by the traits that whites are claimed to possess. Selecting them based on race is extremely crude.
Walt seemed like he was participating in good faith, but I found he rambled on a lot and would have preferred to have him pinned down more on some of these issues. I think he reinforced my impression of the alt-right, which is not that they were a bunch of super intellectual misfits but that they actually had terrible epistemic habits and were white nationalists more for the vibes as the kids say rather than its intellectual merits. I've read some of Richard Spencer's stuff and seen interviews with him. He's not that smart. I haven't been impressed by anything from the alt-right as far as intellectual arguments go.
I think that's separate from believing in human biodiversity. It's the leap from human biodiversity to white nationalism that I have never found convincing. I think there is a parallel here with communists, who are extremely difficult to convince to enter into a serious debate. Attempts to debate communists are shot down as risking undermining class solidarity. Similarly, attempts to debate white nationalists are shot down (though not nearly as quickly and definitively) as risking undermining white racial solidarity.
Another parallel is how communists put a huge amount of effort into debating theory (though not at addressing the best counter-arguments to that theory as they mostly only debate other communists) and almost none in how a communist society would actually work.
Glassnoser
18d ago
I was able to see them in the snow just before and after the total eclipse. They were interesting. They were like waves of faint shadows all running in the same direction as the moon.
Glassnoser
19d ago
What a funny name.
Glassnoser
28d ago
This is what Canada does.
How would allowing re-importation help? Edit: who is downvoting me just for asking a question? Can we not turn this into Reddit?
The Canadian government is increasing the capital gains tax for the relatively well off. They claim it only affects 0.13% of Canadians, but this is a lie, since capital gains are extremely lumpy, mostly affecting estates. A much larger share of the population will be in that 0.13% at some point in their lives. The tax will affect a lot of middle class people, distort the economy, and, as I'll explain at the end, redistribute wealth to foreigners.
Currently, 50% of capital gains count towards your taxable income and so you'd pay half the marginal rate, which tops out at between 44.5% and 54.8% depending on which province or territory you live in. The new rule would raise the portion of capital gains that is taxable from half to two thirds for capital gains over $250,000. Primary residences are exempt and it doesn't affect tax protected savings accounts like RRSP and the relatively new TFSA. Most people don't save enough to have savings outside of these accounts and their primary residences, but you certainly don't need to be rich to do so. You could be someone who chose never to own his primary residence and increased savings in the stock market instead. You could own a cottage, to which the capital gains tax applies when you either give it to your children or when you die. Lots of middle class people will be affected.
The capital gains tax is actually a very unfair and even absurd tax. You invest after-tax income from your salary and then when you realize a gain on those savings, even if it's just enough to keep up with inflation such that you have no real gain, you pay taxes again. Someone who is equally wealthy but doesn't save his income for as long would pay less tax. So it taxes savers more than spenders and discourages investment. There are further distortions due to the fact that primary residences are exempt, which incentivizes people to save by investing in their primary residences, inflating property values and making housing more expensive.
This brings me to my last point. The Liberals are far behind the Conservatives in the polls and an election is at most a year and a half away. The main issues tanking their popularity are housing and immigration, particularly for young people, who see a connection between those two issues. Older people don't care so much and are happy to see their property values rise (property values have risen far out of proportion to incomes in recent decades). However, this new tax rule is being promoted in the name of generational fairness.
This makes no sense. The Liberals have dramatically increased the immigration rate, which certainly has inflated property values. There are good arguments to defend this, among them that the higher property values are a net gain for Canada since the vast majority of property is owned by Canadians and most Canadians are homeowners. It really only hurts renters whose parents aren't homeonwers and therefore won't inherit that wealth. Most young Canadians, even if they rent, have parents who are benefiting from this and therefore shouldn't really complain (although they do). Now, the government is doing the one thing that messes this up: they're redistributing much of those gains to the younger generations who include, in very large and increasing numbers, immigrants and their children. What is the point of inflating asset prices with immigration if you're just going to redistirbute the gains to those immigrants? If your goal is to be maximally charitable to immigrants, fine, but this is not in the best interests of Canadians.
The tax increase does exempt primary residences, but not other assets like secondary residences, and the reason for this tax increase is to fund the enormous increase in spending on things like subsidies for new home buyers and affordable housing. The deficit has ballooned to $40 billion dollars under Trudeau and I think the government is actually starting to get desperate and trying to think of ways to raise revenue without spending political capital. Corporations and trusts will also pay this higher capital gains tax. This will reduce business investment. The tax seems calculated to actually raise a fair bit of money while minimizing the number of people who think they'll have to pay it.
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