Hacker News Reader

Comment by humanrebar | Hacker News Reader

Given the new facts on the ground about the relative strengths of capital and labor, a rethinking of the government-imposed incentive structure is in order. In general, we tax labor at a much higher rate than returns on investments.

My preferred solution would be to stop taxing good things (income and investment) and start taxing not-so-good things (luxuries, frivolities, dangerous but legal products, etc.).

View on HN

One issue with that is that it gives government incentives to keep people in their vices. As an imperfect example, police departments that plan on funding a significant part of their budget from speed tickets aren't encouraged to educate people against speeding or fix unreasonable speed limits.

It's also not that stable of a form of government revenue. Vices tend to be inelastic, but luxury spending will often drop precipitously in a downturn.

I wasn't advocating for funding the government through fines. There are ways to broadly tax undesirable things.

And, yes, governments should budget with shifting revenue levels in mind. But I think we already have that problem at the state and local level, and I'm certain that our current taxes on income and capital gains are not the only way to mitigate those risks.

ROI is taxed at about the same rate as labor, if you count corporate income taxes and capital gains or dividend taxes (depending on the investment). Labor is only taxed once, as it is a corporate expense.

Reply on news.ycombinator.com