alt Hacker NewsThis is a bad deal. Capital makes the marginal worker more productive, not less. You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity. (This argument also applies to AI, of course. Since AI doesn't just instantly wipe out all jobs, there will be many workers that will benefit from it and will thus be quite able to fund their governments and social systems.) If you wish to tax some forms of "capital", or rather assets, you should focus on pure rent-generating assets like valuable urban land, or local exclusivity rights to parts of the EM spectrum.
Replies
It's not a matter of a "deal" to be made or agreed to, it's a matter of paying a fair share of the cost to organize a society. When Capital gets to reap dual benefits of revenue from business prospects and lobbying government directly to set the tax rules, then it can't ALSO offload outlaying to the public good that it DEPENDS on to make a profit.
Avoiding tax through various loopholes that Capital gets a seat at the table to help craft, while benefitting from externalizing the costs to taxing labor is just corruption.
Workers make capital productive.
If your argument were true we should set taxes on capital to zero, which is quite obviously a bad idea.
> Capital makes the marginal worker more productive, not less. You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity.
Point one: higher productivity is not necessarily our goal. I could think of numerous industries that would make the world better if they did less work.
Point two: There's a moral absurdity in taxing the wages earned by labor more heavily than the returns earned by ownership. One is tangible effort, the other is an abstraction backed by law. If anything, taxing capital should be the baseline, because it's the least tied to survival. Historically, when America was at its most broadly prosperous, capital gains and corporate profits were taxed at far higher rates than today.
Point three: AI intensifies that calculus. If AI is deployed by capital to further replace or devalue labor, then taxing only the worker is punishing the displaced while rewarding the displacer. That's pure extraction. If we want social systems to survive, the burden has to fall on the owners of the machines, not the people being replaced by them.
Genuinely one of the largest and most destructive ills of our society right now is that so tremendously more of our shared prosperity as a system is directed to those who do the least to create it.
> You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity.
This assumes the worker is the one benefiting from the productivity gains. We're just worked more and we don't get the added value.
> This is a bad deal. Capital makes the marginal worker more productive, not less.
Why should workers care about being more productive if they do not reap the rewards in terms of wages?
https://en.wikipedia.org/wiki/Decoupling_of_wages_from_produ...