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Comment by TigerTeamX | Hacker News Reader

0.99*10 = 90%. Why do you need to work just to keep your wealth at the same level? Isn't that a big red flag?

That has nothing to do with the term “negative compounding”.

Although for what it’s worth, I don’t think it makes a lot of sense for the wealthy to comfortably do nothing and contribute nothing to society.

I would prefer wealth weighted income taxes personally.

I think it should be 0.99^10, since you lose 1% every year, just like interest.

Example showing final balance at end of each year:

Year 0: Start with $1000

Year 1: $990 (1% is $10)

Year 2: $980.1 (1% is $9.9)

...

Year 10: $904.38

Yes, you're right. I made two stars but HN removes that. Many times in programming we use two stars for meaning ^

0.99*10 = 9.9, I should think; of course, 0.99^10 ≈ 0.9 but 0.99^n is not in general well-approximated by 1-0.01n.

Yeah, that's right. I wrote two stars but apparently they're removed by HN.

Other follow up, you can always buy government treasuries for yield to offset the tax, which requires very minimal work. At billionaire wealth level, you most certainly have someone managing the funds for you.

They yield 3-5% right now. Official inflation is 8%. You're losing 3-6% based on official inflation data. I don't know about you though, but things went up a lot more than 8% for me. But let's say just 3% a year loss, that's a loss of almost 30% over 10 years.

You’re not entitled to be sheltered from inflation, especially not for just passively investing income.

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