h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

>>If there is no incentive to accrue wealth, there is no point. We may as well all sit around on benefits."

If you're trying to be provocative, it's probably best not to be downright silly.<<

I didn't see this as being particularly silly, indeed it's one of the fundamental points against a completely, or even heavily, redistributive state. If one cannot decide what to do with their wealth, then why should they bother taking risks to earn money?

It's something that we can see for ourselves in the modern world - relatively low-tax regimes such as the UK and US have higher rates of entreprenurship (such as new business start-ups and small businesses) than those countries with very high taxes, such as the Nordics.

As I said above, I don't mind the government taking some of (formerly) my assets, but the idea of them taking most or all would bother me a lot.

>>" didn't see this as being particularly silly, indeed it's one of the fundamental points against a completely, or even heavily, redistributive state. If one cannot decide what to do with their wealth, then why should they bother taking risks to earn money?"

I take it you note that in most countries, people generally *do* put some effort into acquiring money?

The greatest disincentive in the UK is possibly at the lower end of the income scale, with benefits reduced pound-for-pound when people start to earn. I doubt those people are hugely concerned by the threat of inheritance tax.

>>"As I said above, I don't mind the government taking some of (formerly) my assets, but the idea of them taking most or all would bother me a lot."
Where do they take *all*?
With inheritance tax, they're not taxing you, they're taxing the unearned income of your beneficiaries.

>>"It's something that we can see for ourselves in the modern world - relatively low-tax regimes such as the UK and US have higher rates of entreprenurship (such as new business start-ups and small businesses) than those countries with very high taxes, such as the Nordics."

Those would be the same Nordic countries which seem to rate pretty well for quality-of-life?

<>

Yup. So good people are literally killing themselves.

Have you seen the suicide rates in Nordic countries?

http://www.who.int/mental_health/prevention/suicide/suiciderates/en/

>>I take it you note that in most countries, people generally *do* put some effort into acquiring money<<

Most countries aren't heavily redistributive in their tax regime. In those that are/were such as the early Soviet Union, the early Peoples Republic of China, current North Korea, people didn't or don't work for money. Why bother when the government will take it off you?

>>Where do they take *all*?<<
As far as I'm aware, nowhere. However in this sentence my use of the word "would" is important. I've said twice I'm happy with the status quo in the UK, I recognise the government's right to take some of my assets once I'm gone. But I'd be bothered by a hypothetical government that took all or most of my stuff, as is being suggested by some on here, as part of our discussion.

>>With inheritance tax, they're not taxing you, they're taxing the unearned income of your beneficiaries<<
Slightly dodgy argument here. No-one says income or property has to earned for a persons claim on it to be valid. I'll be seeing my new newphew later today and I'll be giving him (via his mum) a few bits and bobs. He's done nothing to earn his new property, he can barely lift his own head, but the government would have no right to step in and claim it.

I have the right to transfer my property right now to whomever I chose for whatever reason, without anyone being able to interfere. Even if I chose to give my stuff away to some slob who'd done nothing with their life, even if there were more worthy people, it's my business. Death shouldn't change that.

>>Those would be the same Nordic countries which seem to rate pretty well for quality-of-life?<<
The very same. But that's the choice a country must face and no-one can say which is right - it comes down to the beliefs and choices of the individual. Personally I'd lean more towards the Nordic style of social economics. But I was just highlighting a difference between the low-tax countries and high-tax ones, a difference which is relevant to the current drift of the thread.

I will say this - Norway is going to be in considerable trouble when its oil and gas run out. It's unclear how it can make the transition to an economy like that of Sweden's and Finland's, and it doesn't have the sort of entrepreneurial culture of the UK. I can't see it heading the UN Development Index for long once the wells run dry.

Those would be the suicide rates (Norway/Sweden) somewhat lower than Luxembourg, Switzerland, Austria, Germany, Belgium?

Given the number of factors that can be involved in suicide, I don't see suicide rates as a great indication of general quality-of-life, certainly not to the extent that they'd override studies expressly into quality-of-life measures.

Possibly suicide rates might be some indication of a society's ability to detect and treat depression, but since the people who do kill themselves are generally not acting rationally, they aren't always the best guide to what is happening in the wider society.

>>"But I'd be bothered by a hypothetical government that took all or most of my stuff, as is being suggested by some on here, as part of our discussion."

I guess most people would be hypothetically bothered by a hypothetical government that took all their stuff, hance that would rather require a dictatorship, so property rights might not even be people's first concern in such a scenario.

>>"Slightly dodgy argument here. No-one says income or property has to earned for a persons claim on it to be valid."

I wasn't saying no-one had a valid partial claim. I'd argue that ethically speaking, significant unearned income should be about as liable to tax as earned income.

>>"I have the right to transfer my property right now to whomever I chose for whatever reason, without anyone being able to interfere. Even if I chose to give my stuff away to some slob who'd done nothing with their life, even if there were more worthy people, it's my business. Death shouldn't change that."

It's actually not your business if the person had done anything to earn the property transfer. As I said, there's no obvious ethical argument why only earned income should be taxable.

In practice, for large gifts, outside a family context they're so rare that they're probably not worth making tax regulations for.
For small gifts, there's no support for taxation, nor is there any practical method of taxation.

When people die, the state will get to know about it, so it's a fairly convenient point at which to levy taxes on large property transfers.

Maybe its because our lot have watched too many movies and are doing it wrong: trying to saw through the tendons rather than cutting along the arteries.

If someone really wanted to bleed to death, the wrist is a pretty poor place to start.

suicide people most of them just want to make a point attenion seeking but it goes to far. I knew of this person who was lonely and had suicide thoughts but when she found a rich man who would take her holidays the works funny how they thoughts vannish untill he finds her out and its back to the drawing board till the next sucker comes along .

A couple of things to respond to, at the risk of dragging things even further away from the original question.

On the question of incentives, I am always puzzled about the right wing attitude is generally that the rich need incentives and the poor need threats. Apparently the way to incentivise the rich is to offer them even more on top of the mountain of wealth they already have, but the way to incentivise the poor to work, or to work longer hours, is to reduce their income or threaten to do so.

I also don't see any reason to believe the standard right wing argument that the rich will suddenly stop working if the substantial inequalities of income which they benefit from are reduced by even a small amount.

"I have the right to transfer my property right now to whomever I chose for whatever reason, without anyone being able to interfere. Even if I chose to give my stuff away to some slob who'd done nothing with their life, even if there were more worthy people, it's my business. Death shouldn't change that."

If by 'right' you mean under UK law, then that's true. But it need not be. All legal systems and all societies have to make decisions about rights and responsibilities, and about how to balance conflicting liberties. The problem with having a legal right to freely bequeath resources to others after death, as I see it, is that it clashes with a much more fundamental right - the right to liberal equality of opportunity, to as near a level playing field as possible for the next generation. Of course, natural talent and nature/nurture will never allow a totally level playing field, but a system where members of each generation are expected to provide for themselves, not sit back on unearned and undeserved inheritance.

"I guess most people would be hypothetically bothered by a hypothetical government that took all their stuff, hance that would rather require a dictatorship, so property rights might not even be people's first concern in such a scenario."

There's no reason for thinking that a system of government which was more egalitarian in the distribution of wealth need be a dictatorship. See A3136042 for one example, although it implies no particular system of dealing with inherited wealth.

The rich won't stop working if they feel overly-penalised. They'll just leave. Or they'll go to even greater lengths to conceal their wealth from the authorities. It's a lose-lose situation when the state tries to unfairly penalise the wealthy *in their view*.

>>"The rich won't stop working if they feel overly-penalised. They'll just leave."

Some people who actually can leave since their work can be based anywhere (eg rockstars) already do.

The people being paid huge bonuses in the City won't generally move elsewhere, since few other places would pay them as much.
GPs taking home 100K+ won't leave.
Lawyers charging huge hourly rates won't leave.
Company directors won't leave.
They know there are people of similar talent already in other countries, and (maybe apart from doctors) few of them would be really wanted elsewhere, even if they want to pretend that they are.

Besides, on the company side, the old-boy network that got many where they are ("Company gone down the toilet? Sacked (with bonus) for incompetence? Well, come and work for us then") won't do much for them abroad.

The people being paid huge wages get them because their company figures they're worth it. Increase the tax burden and they'll have their salaries raised accordingly. Salaries come from profits which come from the pocket of the man on the street. So increase taxes on the higher paid and the only people you hurt are at the bottom of the food chain.

>>"The people being paid huge wages get them because their company figures they're worth it."

Bo**ocks!
For directors, etc, they vote each other large salaries and bonuses because they have the power to do so, not because they're worth it. There isn't some mystical 'company' entity making market decisions, there's a bunch of people who want to be rich.

If they fail massively, they still often seem to get paid serious bonuses, sometimes more than normal people would hope to earn in years of competent hard work, and failure doesn't seem to be a bar to future employment. After all, if the company suceeds, it's down to them even if they haven't really done anything. If the company fails, it's not their fault even if their decisions caused the failure.
They 'get rewarded for taking risks', yet often their cost of failure is wealth, not poverty and unemployment.

People who actually build up a company from scratch are one thing - they do deserve some kind of reward.
People who just walk in to highly-paid win-win jobs are something else.

Shareholders have the final say-so on top level salaries. If they don't think the office-holder is worth it, they won't offer the salary. It comes out of their dividends after all. And as for fat pay-offs, shareholders sign off on the contracts.

>>"If they don't think the office-holder is worth it, they won't offer the salary."

They don't *offer* the salary. At best they can approve the board's decisions, or take the risk of booting out the board.

Large shareholders are often other companies (pension funds, etc) also run by people with a direct personal interest in keeping high-end salaries high.

If I was a shareholder, I'd be wary about kicking out an entire management team even if I thought they were overpaid unless maybe I was a majority shareholder and I'd already lined up people to replace them.
Once people *are* overpaid, there's a risk in changing things even if you know they're overpaid, whether it's a management team or a group of people actually working on producing a product, but the potential dangers of getting rid of people are frequently not directly proportional to how much they are paid or overpaid.

Top-end salaries themselves, even excessive ones, are still likely only a small fraction of a firm's costs, so altering them isn't likely to have a great effect on the balance sheet.
If I was a minority shareholder, (as almost anyone is who isn't intending to take over a company) it wouldn't be a question of "Is X, Y, or Z overpaid", but "What's the risk of change compared to the [likely lesser] risk of not doing anything?".
If someone isn't actually screwing the comapny into the ground, the amount they get paid probably isn't a great issue for me as a shareholder.

If bosses have written each other nice contracts with great payoffs, getting rid of them can be extremely expensive.

"The people being paid huge wages get them because their company figures they're worth it. Increase the tax burden and they'll have their salaries raised accordingly. Salaries come from profits which come from the pocket of the man on the street. So increase taxes on the higher paid and the only people you hurt are at the bottom of the food chain."

If you shift the tax burden from the less well off to the better off, the financial position of the less well off will improve if there is no change to overall spending. They'll be being taxed less, or being paid more in tax credits or other benefits (health, education, childcare allowances etc). For example, raising income tax on the richest to pay for a cut in VAT on certain items, or a higher personal tax allowance, or a lower first tax bracket will leave improve the position of the least well off.

Independently of that, I'm not sure why it follows that increasing personal taxation will increase the cost of employing directors etc. The cost to the employer will remain the same (salary plus employmer's taxes plus benefits - pension etc). Unless there's some kind of sudden shortage of people willing to do the jobs for the lesser net salary, which I doubt.