- Eliezer Yudkowsky's facebook page posted:
- This is why most taxes should be on consumption (value-added tax, luxury tax) and fixed resources (land value tax); while capital gains taxes and corporate income taxes and income tax should all be zero:
- "Did you know that our current Grand Treasurer is a dracon? And into his hoard goes the tenth part of the increase of the kingdom's treasury, to harness his greed for its management."
- "The tenth part of the increase?" I exclaimed, shocked down to my sandals. I couldn't even imagine how many drachmas that worked out to. "Wouldn't, um. Wouldn't removing that much money from the national economy have macro-level effects?"
- "Ah! But you see, Lord Droon is a touch saner than other dracons. Droon does not hoard gold or jewels or dwarfwrought treasures. There is no paying people to dig up metals and then paying other people to guard them. Instead, Lord Droon's hoard consists of a number of embossed parchments - certificates saying that he owns certain businesses and concerns within the kingdom. Droon's riches are real; he could sell those embossed parchments for gold or jewels any time he pleased. To my knowledge, Droon is wealthier than any other dracon for ten thousand leagues. And yet nobody goes hungry just because Lord Droon sleeps on a dwarfwrought chest full of parchments. Droon spends none of his wealth on mansions or finery. All the income of Droon's parchments go into Droon's businesses or other investments, to buy dwarfwright machinery or send out caravans. So Dwimber's people thrive, and the Dwimbermord's treasury grows, and Droon gains the tenth part of that increase as well - all as more embossed parchments. Lord Droon's hoard sequesters only abstract concepts from circulation, while in the real kingdom seed-grain flows from his hands like water. Lord Droon is the prisoner of his greed as much as any dracon, and yet he has taken a step beyond that. He has harnessed his draconic greed, the desire imposed on him by his magic, and shaped it to help others instead of harming them."
- Don't tax Lord Droon just because he wants to sleep on a chest full of abstract concepts. You'll interrupt the process that causes other people to receive seed grain and dwarfwright machinery. There's no cause to envy Droon while he goes about in simple clothes and works sixteen-hour days for other people's benefit. Trying to take away his precious parchments is nothing but spite. The tax that Lord Droon pays should be zero until he actually tries to spend money on mansions or finery. That's what's best for the kingdom, and it is both fair and just.
- If you want to slap a 300% luxury tax on giant yachts, that's fine by me. But if "rich" people are sending material goods to other people instead of themselves, like by taking billions of dollars of "personal income" and using it to "buy stocks" that "double in value" while they live in a tiny apartment, then you shouldn't dip your fingers into their philanthropy. (Beyond the standard tax on their tiny apartment.) Until, of course, the person tries to actually buy mansions and finery instead of more parchment, whereupon I suddenly agree that they've revealed themselves to be rich after all and can justly be taxed quite heavily. A tax policy like that does encourage people to buy parchments instead of mansions, but there's nothing wrong with promoting charity. It all becomes much more intuitive once you understand how Lord Droon managed to fool his sense of greed.
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