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Comment by sbov | Hacker News Reader

The reason is simple: labor has less options. Capital can mostly go where it pleases - if it is taxed too much it might flee the country. But your 160 million workers aren't going to uproot themselves and move to another country because they're too heavily taxed.

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Honestly, where would it go? The US Treasury sets the bond price and no one is turning it down even with completely shitty returns (like 1-2%!). If capital flees they can go to an even higher tax country in the EU. They can go to a negative return country like Switzerland. They could go to China, but guess what, it's a one way trip!

I bet if lawmakers said capital gains tax is bumped to 20% everyone of them would bitch and moan for 30 minutes, and then pay the damn tax.

You mean the same lawmakers that sit on the boards of so many multinational corporations? Might as well ask for world peace.

Are you thinking of any specific one out of the "so many" examples, or are you assuming? Because for Senators, it's illegal to sit on a corporate board, and for Members of Congress, it's only legal if the position is unpaid: https://politics.stackexchange.com/questions/10976/legislati....

However their relatives can sit on boards, so a senator's spouse would be fair game. And they can use the paid board gig to make money between terms.

Susan Bayh, ex senator and governor from and Indiana married to another senator, sat on multiple boards between her own political terms and while her husband was in office (also while she was governor). She's been on at least 14 boards in total: https://en.wikipedia.org/wiki/Susan_Bayh

Are you suggesting that spouses of Congressmen shouldn't be permitted to sit on corporate boards? (And presumably, should be excluded from any of a range of careers in the private sector.)

No, I'm just claiming policy makers can be influenced by corporate boardrooms. I don't really have a solution for it, and I can't really say that I know whether or not this is a big problem that needs solving, but is there legal ways for companies to use board positions to affect policy makers? Yes.

Personally, I don't think it's the worst. I would rather they had to do this than get huge retirement packages as they do in my country after their service. Also, if their spouses can make a living being involved in business so politicians can't use sympathy for their poor family as leverage to get higher compensation that would be good too. But we can't handwave the issue of corporate influence over politicians however we choose to deal with this.

Wait, since when was she a senator and governor?

"Unpaid", but members of congress are allowed to inside trade, and their portfolios are curiously successful.

See: https://pdfs.semanticscholar.org/c294/8992cb8681c41dbb1d163f...

They can get around that through the "revolving door" between legislators and lobbying groups: opensecrets.org/revolving/

The old "you pass legislation that we want, and we'll have a seat waiting for you on the board after your term is over, with a nice paycheck attached".

If it were me, I would consider moving my money to Latin America. Not Mexico of course, due to the recent election, but definitely would research the regions and political climates of our southern neighbors.

Sounds like you should probably start researching now if a 20% capital gains rate makes you think "Latin America" outweighs an additional 5% in taxes.

You plan to invest in a market you know little about. You should definitely do your research. The five largest markets in Latin America are:

Brazil

Mexico

Argentina

Venezuela

Ecuador

2 have a problem paying their bills on time. If you don't like Mexico I have some unfortunate news for you regarding Ecuador.

So that leaves Venezuela...

Well, they don't need to go anywhere. But their money can go anywhere and vanish in complex shell constructs, as it already does.

That's the problem, they wouldn't just moan for 30 minutes. They would spend money to have the tax reduced which I'm assuming is the only reason the tax isn't at 0% because it's not worth it for them to push it below 15%.

"Spend the money" = "lobbying" = legalized bribery, and sometimes blackmail.

Regulatory capture is the biggest enemy of free markets.

Though I agree with you to a point, I'm careful not to take this first pass understanding too far. A socially cohesive society with well funded infrastructure, reliable courts, low inflation, stable interest rates, and an educated populace makes for a very attractive investment area.

Sweden has a capital gains tax of 30%, two to three times that of America and they have a similar GDP per capita, depending on the year.

> The reason is simple: labor has less options. Capital can mostly go where it pleases - if it is taxed too much it might flee the country.

That's not a law of nature, just an artifact of the current legal regime. It would definitely be a challenge to update the law to make it harder for capital to hop between jurisdictions to avoid tax, but it's also a challenge to collect individual income tax, so I think it'd be doable if the political will was there.

> Capital can mostly go where it pleases

Historically this was not the case at all. It's only during the modern neoliberal era that this is true.

Thing to remember Capital isn't a primary resource like energy, infrastructure, materials, and labor.

Tax land; you can't just walk off with that.

That's a start, but land is only a small fraction of capital.

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