Re: novel argument against taxing rents

tonyp wrote:

"Les Cargill" <lNOcargill@xxxxxxxxxxx> wrote


But that goes back to the old question - what is earned
and what is unearned? That question seems resistant to
objectification.



Defining what is "earned" is a mug's game. Tony Soprano and his crew
consider the money they steal and extort to be "earned".


Organized crime in general evolved as a reaction to the absence of legitimate government, so they're more or less justified in the
belief. Siciliy was an anarchist backwater, and La Cosa Nostra
filled the void.

It's not hard to see Tony Sporano as an evolution of the same thing - the Mafia found anarchist backwaters and organized them to their,
benefeit, Viking traders found what's now Russia the same, did same, George Washington was a significant land speculator who doubtless participated in the Revolution to support that,.... Sam Houston, same.. it goes on and on.

IN fact, I see rent-seeking *itself* as a sort of manifestation of
the general biological pattern of evolving defacto solutions into
some sort of vaccuum. The descndants of the mitochondrial Eve were
not just out walking.

The only reason we care about dividing incomes into "earned" and "unearned"
is because we foolishly allow our government to _tax_ them differently. The
standard theory is that taxing returns to capital at the same rate as wages
would inhibit capital investment. But is that assumption correct? If
correct, does it in any sense _optimize_ capital investment?


It's rather hard to say, because of the tone of righteous indignation. A shadow variable has been introduced into the table
which exceeds all other factors.

We trot up Spencer's IX, and glare, I think...

It surely does not _maximize_ capital investment. Cap gains tax cuts do not
seem to have done a bit of good for the savings rate of the US. We are the
world's biggest debtor. In the aggregate, and on net, we are _not_
investing, because we are not saving. Does anybody here believe that if we
eliminate cap gains tax altogether we will reverse the trend toward
_dis_saving?


Capital formation has diddly to do with saving any more. It's become 100% about varying techniques of leverage, and I'm hard pressed to say that doesn't work better - until you need the savings to bridge a span of time.

A tight money supply is a lousy way to regulate human behavior.

-- TP


--
Les Cargill
.

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