You frame it like those are the only two choices. They aren’t. The third choice is capital flight.
People constantly forget that governments don’t have godlike tax enforcement powers. In the real world people avoid taxes via a million different avenues. Absconding with their money for greener pastures is a last resort but it happens constantly.
Take China for example. Taxes are way lower than the US yet capital flight is such a huge problem that the government has enacted Capital controls. Yet capital flight from China continues largely unabated.
So what this means in practice is that if you want to have a 91% top corporate tax rate in the US without a gargantuan capital flight problem you’re going to need a government that is way more powerful and draconian than either the US or China is right now.
Now you might say “what if I just let everyone go and get the money back when they try to sell things to the US?” Well that’s basically what the US under Trump is doing right now, via tariffs. But then you tack on the capital flight beforehand and that means all the big companies, all the great jobs, leave the country before prices skyrocket. This is how you impoverish the US to third world status.
A third choice is capital flight. there are even more choices, including but are not limited to creative accounting to hide revenue and assets, or bribing -er I mean supporting politicians in exchange for writing loopholes into the tax code.
If by issues you mean wealth distribution and the existence of an ultra-rich, powerful class, no. I don’t have a solution to that. The fundamental problem is that wealth brings power and the concentration of wealth and power in fewer hands brings other benefits, namely: coordination.
Smaller groups nearly always have an easier time coordinating their efforts than larger groups, so smaller groups tend to have a disadvantage unless they’re on the battlefield (and even then, wealthy well-supplied small groups of soldiers easily defeat large groups of poorly-equipped, poorly-trained peasants).
The big problem with the high-tax approach is that it’s a class warfare strategy. Apart from the communist revolutions of the 20th century, the history of class warfare has not gone well for the non-rich side. I think that moment in history was a unique one and unlikely to be repeated, barring the unforeseen appearance of some new decentralized warfare technology.
So where does that leave us? We can try non-class-warfare strategies. We want to align the interests of everyone, rich and poor, towards a common goal: peace, prosperity, and sustainability. Why would the rich want this? Because life is better that way! It’s much nicer to live in a safe, walkable, integrated, and prosperous community than it is to live in a walled compound surrounded by ghettos.
Because life is better that way! It’s much nicer to live in a safe, walkable, integrated, and prosperous community than it is to live in a walled compound surrounded by ghettos.
💯
Selfish rich people should be properly selfish and make the world better so they don’t have to be grossed out by poors. Or worry about heli skiing becoming impossible one day. Be selfish richies!
I’m reminded by the story I once read about Eritrea, a country with wealthy enclaves for the royal family plus foreign petro-engineers. The enclaves have these walls along the road with vast ghettos on the other side.
It’s a miserable place. The engineers tend not to stay long. Just make a lot of money in a short time period and then leave.
You frame it like those are the only two choices. They aren’t.
No, I provided a simplistic, informal explanation, not a conclusive evaluation.
The third choice is capital flight.
Let the parasites leave. That’s the point. They are sucking the working class dry, and we would be better off without them.
Your argument operates under the assumption that a member of the current ownership class needs to be involved for a business to be successful. That is simply untrue. They aren’t the component enabling employment. They are the parasite leeching our productivity.
The reality is that the most prosperous era of American history was made under a 91% tax rate, specifically because such a tax rate drives capital into the control of the working class.
You frame it like those are the only two choices. They aren’t. The third choice is capital flight.
People constantly forget that governments don’t have godlike tax enforcement powers. In the real world people avoid taxes via a million different avenues. Absconding with their money for greener pastures is a last resort but it happens constantly.
Take China for example. Taxes are way lower than the US yet capital flight is such a huge problem that the government has enacted Capital controls. Yet capital flight from China continues largely unabated.
So what this means in practice is that if you want to have a 91% top corporate tax rate in the US without a gargantuan capital flight problem you’re going to need a government that is way more powerful and draconian than either the US or China is right now.
Now you might say “what if I just let everyone go and get the money back when they try to sell things to the US?” Well that’s basically what the US under Trump is doing right now, via tariffs. But then you tack on the capital flight beforehand and that means all the big companies, all the great jobs, leave the country before prices skyrocket. This is how you impoverish the US to third world status.
A third choice is capital flight. there are even more choices, including but are not limited to creative accounting to hide revenue and assets, or bribing -er I mean supporting politicians in exchange for writing loopholes into the tax code.
Yes. Capital flight is one of the last resort moves, as I said. Take your money with you and leave the hostile country.
Do you have an alternative suggestion to tackle the issues that such a high tax rate tries to address? I’m just genuinely curious.
If by issues you mean wealth distribution and the existence of an ultra-rich, powerful class, no. I don’t have a solution to that. The fundamental problem is that wealth brings power and the concentration of wealth and power in fewer hands brings other benefits, namely: coordination.
Smaller groups nearly always have an easier time coordinating their efforts than larger groups, so smaller groups tend to have a disadvantage unless they’re on the battlefield (and even then, wealthy well-supplied small groups of soldiers easily defeat large groups of poorly-equipped, poorly-trained peasants).
The big problem with the high-tax approach is that it’s a class warfare strategy. Apart from the communist revolutions of the 20th century, the history of class warfare has not gone well for the non-rich side. I think that moment in history was a unique one and unlikely to be repeated, barring the unforeseen appearance of some new decentralized warfare technology.
So where does that leave us? We can try non-class-warfare strategies. We want to align the interests of everyone, rich and poor, towards a common goal: peace, prosperity, and sustainability. Why would the rich want this? Because life is better that way! It’s much nicer to live in a safe, walkable, integrated, and prosperous community than it is to live in a walled compound surrounded by ghettos.
💯
Selfish rich people should be properly selfish and make the world better so they don’t have to be grossed out by poors. Or worry about heli skiing becoming impossible one day. Be selfish richies!
Hey economists love VAT I hear?
I’m reminded by the story I once read about Eritrea, a country with wealthy enclaves for the royal family plus foreign petro-engineers. The enclaves have these walls along the road with vast ghettos on the other side.
It’s a miserable place. The engineers tend not to stay long. Just make a lot of money in a short time period and then leave.
No, I provided a simplistic, informal explanation, not a conclusive evaluation.
Let the parasites leave. That’s the point. They are sucking the working class dry, and we would be better off without them.
Your argument operates under the assumption that a member of the current ownership class needs to be involved for a business to be successful. That is simply untrue. They aren’t the component enabling employment. They are the parasite leeching our productivity.
The reality is that the most prosperous era of American history was made under a 91% tax rate, specifically because such a tax rate drives capital into the control of the working class.