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posted by Fnord666 on Saturday July 15 2017, @10:41PM   Printer-friendly
from the status-quo dept.

Arthur T Knackerbracket has found the following story:

Human beings largely object to income inequality and are willing to correct injustice—unless, of course, it rattles their status quo.

That's the conclusion of a recent study looking at how far people would go to redistribute resources between the haves and have nots. Participants fiercely objected to "when winners become losers and losers become winners," researchers note in the paper, published in the latest issue of Nature Human Behaviour.

Researchers initially recruited Indian, American, and Chinese participants take part in an experimental game they called "the redistribution game." The gist of the game was simple: Participants were given a number of scenarios that would redistribute a fixed sum from a richer person to someone poorer. Participants were told the original standing of wealth was assigned randomly.

In the first scenario, participants had to decide if they wanted to transfer two coins from person A (who already had four coins) to person B (who had one). Researchers note the "transfer would reduce inequality," (as there's less of a gap between them), but person B would end up one coin richer than person A, reversing their status.

In the second version of game, participants were asked whether they'd transfer one coin to person B (where person A ended up with three coins and person B with two coins). Researchers ran a third and fourth scenario that allowed participants to transfer coins from person A to B, where the outcome still left person A with significantly more coins.

-- submitted from IRC


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  • (Score: 0) by Anonymous Coward on Monday July 17 2017, @03:52AM

    by Anonymous Coward on Monday July 17 2017, @03:52AM (#540164)

    "...and the rich stuff their money into mattresses where it gains them no additional income."
    "...and real estate has never been know to appreciate in value."

    Missing the point. If you're taxing it at a rate commensurate with income, it's effectively an income tax and we're back at square 1 - they don't actually have, on balance, as much income as you'd think. Certainly not enough, in the top 1%, to finance all those delicious social programmes. The top 1% get maybe 20% of the nation's income (USA, here). The top of the pyramid spikes high, but it's pretty narrow. If you want a broad-based tax on income, you need to go a lot deeper.

    If on the other hand you're simply taxing the raw value of assets, you're inducing a whole different problem. I'd thought it would have been fairly clear from the post above, but evidently it wasn't so let me spell it out:

    Bob Bigbucks has a Massive Mansion that he lives in. Very elitist of him. On paper (i.e. unrealised value) it might or might not accumulate cash value, but unless he sells, that's essentially imaginary. He lives in it, he's not renting it out, and it requires maintenance. Sure, it's nice that he has it, but it is the proverbial money-pit, only justified by the idea that the alternative is renting, and it might actually increase in market value in the long run. In the short run, as we all know, the value fluctuates.

    Now Greta Government comes along, wearing her bustier and carrying her riding crop, and tells Bob Bigbucks to cough up money because he has an asset. Not because he sold an asset; not because the asset is making him money; because it just is. Because it exists. Because it's there. Not just an extra 2% on his property tax bill, mind you, but a big enough chunk to make a major difference to the USA's medical bill.

    Bob does his sums. Bob looks his mansion square in the eye, and says: "Sweetie, it's been great. We'll always have the good times. But there's this little beachfront property in the Bahamas I want to live in, so ... hasta la pasta."

    If it's just one guy, who cares? But it's not just one. It's dozens, hundreds, thousands of Bobs all putting their property on the market around the same time. And it's not just mansions, it's yachts, it's cars, it's vacation cabins, it's farms, it's wads of stock in ExploitoCorp, it's everything that constitutes a convertible asset.

    Now, let's take a little trip back to the theory of supply and demand, shall we? What happens to the value of items on the market, when there's a glut of items on that market, and when the costs of ownership of those items have just spiked? Anybody? Bueller? That's right - the market falls like a balloon with a brick in it. Asset values? Wow. Yeah. Not so much.

    The good news for Bob, assuming he could even close a sale, is that he now has some cash in hand, and the eye-watering loss he just took at least can come off his taxes, but now he looks around and determines that the best place for this cash is somewhere, anywhere, but here where assets are being taxed merely for existing, at rates that it would be polite to call extortionate. (The annual budget, for those wondering, for health care in the USA has a few zeroes ... might it be in the region of twelve? Yeah, a little property tax today is nowhere near that kind of money, especially not when we're soaking the rich preferentially.)

    So we're either taxing the crap out of assets because wealthy people are blood-sucking vampire squid, or we're taxing the crap out of their incomes. One way or another they're not motivated to stick around and say: "Please sir, may I have another?"

    But let's not forget other assets: assets that show an affirmative return. Bob Bigbucks also has rental property. Of course he does! He's Bob! Dozens, hundreds of families living on his land! Now all of a sudden those evil rental assets turn into ... what? Rental problems, because not only is he being taxed on the whole rental income thing, but the rental asset itself just suddenly got a hell of a lot more expensive to own.

    Oooh, this is a tough one. What can Bob do to get out of this problem? Well, he can kick people out, resubdivide, and rent half sized apartments for the same money to recoup his losses. Or he can raise the rent like a firework going up. Or he can simply ditch the asset because it's now a losing proposition. Hell, he could sign it over to the IRS and let them worry about it. Either way, Bob ditches the thing that was supposed to be a nice nest egg, but is now a leech on his balance sheet. And again, we have Bobs in their thousands doing the exact same thing. The little people, who aren't being taxed, but are customers of people who are being soaked, suddenly find that rent is crazily expensive. Or the building just got sold out from under them and they need to get a U-Haul before the eviction notices start coming.

    The long and the short of it is that confiscatory policies, regardless of how you dress them up, don't actually tend to have the effects desired. Assets tank, people leave (or find loopholes, or find loopholes while they're leaving) and then you just have a new selection of 1%ers, just poorer than the previous lot. One way or another, you're still stuck with your social programme and a worse situation.

    And while we're at it, I can point out that this would apply just as easily to other assets, such as cooperative co-ownership ...

    On another front, it's worth pointing out that estate taxes have had similar results on a smaller scale. They've created an entirely artificial liquidity preference in estate planning, just so that you don't have to ditch major family assets at firesale prices. This is a classic example of unintended consequences, where the asset-wealthy (and often income-poor) are essentially pushed into shoving their money into virtual mattresses. Woo.

    "...or don't allow them to use The Commons to make money. Let them buy their own rights of way then build their own private roads, put in their own electrical wires and communications fiber, etc."

    Yeah, funny thing with that. That was tried during the Gilded Age, and it turns out that it's a great way of lending them power. They build exactly what they need, and don't build what anybody else needs, and then they charge everyone else to use those assets. This is actively counterproductive. Many company towns had company roads, company lighting, company steam pipes, company everything. You may want to check the details of this, but the consensus is that it did not make for a very good outcome.

    Instead, what happened is that things like rights of way were taken over by the government, for use by rich and poor alike, in the interests of giving the poor suckers at the bottom a break. It may come as a shock to learn this, but this was actually very good for small business, even though Bob Bigbucks was only too happy to run his trucks and vans on public roads.

    "eminent domain ... yeah, you'll have to change the constitution to do that"

    "Gawd, you are a moron."

    Quote the whole thing. But what the hell, since you're having trouble with the nuances here, let me break it down. Just taking the shit of rich people runs into a problem, because confiscation without compensation is actually illegal. This is one of the big hurdles for projects such as Hyperloop. Confiscatory taxes and legislated confiscation ("takings") are outlawed by the constitution. If you don't fix those items, or find a root password to the constitution (Drugs! Terrorism! Think of the children!) the basic idea of confiscatory approaches is doomed - the most that can be done is taxation, and in that context you run into asset value problems, or simple magnitude of income problems.

    Now, I won't call you a moron for not figuring all this out on your ownsome, but I will say that your scholarship is lacking. Fortunately, that can be improved with study.

    You gotta lotta work to do.