Spain and Brazil push global action to tax the super-rich and curb inequality
223 comments
·July 2, 2025samiv
Arnt
Really rich people don't have a lot of money, they have a lot of assets that are considered to be worth a lot of money, typically companies. Companies are work. If you make the big owners ask for higher dividends, you tax the work indirectly.
You could of course tax the non-work wealth. Most of that is home ownership, few home owners consider themselves rich.
croon
If this was true there would not be millions/billions constantly spent on pushing for tax cuts and lobbying and hollowing out IRS enforcement.
Arnt
I think you're saying that people would only lobby for tax cuts if their tax bill has one set of reasons, and not if their tax bill has another set of reasons. Right?
justonceokay
The modesty of the landlord knows no bounds
freefaler
The landlord can raise the price because the supply of new apartments is low. With limited supply, the supply/demand equilibrium is going to a higher point.
Why is there a limited supply if people need places to rent? Governmental regulation, financial regulation (e.g. Freddie Mac & Fanny Mae), zoning laws, overregulation on building that eats the margins and the with low supply the most profitable market is for "luxury" apartments with wider margins.
So if you want cheaper rent it's not that the landlord is greedy, it's that his greed can thrive because the market forces aren't working.
As Adam smith in 1776 wrote: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."
e.g. it's not from the benevolence of the landlord that we expect low prices, but from their regard of their own interest to rent the property that competes with many other properties available to rent.
Arnt
Yeah, well. The richest person in the city where I live is rich because many thousand well-paid jobs are counted as part of her wealth. I've heard that she's not a nice person, but that hardly matters: If you want to extract money from that fortune, the money has to be squeezed from the many thousand jobs, because most of it is those jobs. (It's also the buildings it happens in, and the machines they use, but the largest part if the workforce.)
logicchains
Spending money doesn't grow the economy; the economy grows by saving and investment. Punishing people who successfully save and invest by giving money to people who prefer to spend everything they earn leads to less savings and investment, and lower economic growth, as the poor economic conditions of Brazil and Spain demonstrate.
Rich people don't "hoard" the means of production, they create it. Confiscatory policies lead to less business creation; if Gates, Musk, Bezos, Zuckerberg and Page had not had the wealth to create the businesses that made them billionaires, those businesses wouldn't exist, the jobs and products they create wouldn't exist. Europe demonstrates this empirically with its complete lack of any big tech companies, a result of its hostile policies and cultural attitudes to entrepreneurship.
samiv
Investing in passive assets such as property that already exists does not create new economy.
"Rich people don't "hoard" the means of production, they create it."
Actually they do. Look at the GDP growth rates across western countries. 1-2%.
The wealthy people (since pandemic) have grown their wealth 10-20%. Where did that come from if the GDP didn't grow.
The only way they were able to do this was by literally hoarding wealth and by buying assets that already exist and by doing so displacing other people with less assets.
drcongo
Indeed. There's a whole street in London (The Bishop's Avenue) that's essentially unoccupied - every house on it is owned by foreign billionaires. Every now and then one of them knocks down the house and builds a new, more garish one in its place. It used to be stunning, now it's grotesque.
mafuy
I think the GP comment has some issues, but this is not the right way to address them.
If someone owns all the houses but does not rent them out at a reasonable cost, so people have to sleep on the street while the house stays empty, then I will call that hoarding. You don't really address that core problem.
koonsolo
Europe has plenty of startups. The real issue is scale-ups, where the main cause is lack of risk capital.
vitorgrs
Spain is actually one of the few countries in EU that is growing a lot, actually.
ethbr1
> if Gates, Musk, Bezos, Zuckerberg and Page had not had the wealth to create the businesses that made them billionaires, those businesses wouldn't exist
Bullshit. They would have all created those businesses as long as their personal financial situation improved through them.
Arguing that it takes 0.1% wealth payoffs to incentivize business creation is false.
Someone would do it for anything greater than average, if there were global minimums, and a tax structure that allowed corporations to retain capital was used.
sershe
I wish these kind of comments were backed by some numbers. European welfare states are paid for by taxes on the middle class. The wealthy already pay taxes disproportionately and taxing the wealth itself has an obvious problem, it's stock not flow, so given government spending it will last you a few years at best. Then what? The way to fix the economy is to bring one metric back to what it was when the economy supposed ly worked in the past - per capital government spending
mrweasel
> I hope this works.
It won't. Richest people in the world are exceedingly wealth, but they're not that wealthy. I'm not suggesting that they shouldn't be taxed, they should, and much harder than is currently the case. We should move to remove the loop holes used and abused to make people like Bezos appear poor, in the eyes of the tax authorities, but it won't move much in terms of monetary value, because they're not that wealthy.
Let's tax Zuckerberg half of his wealth, that's roughly 2% of the US budget. That's a lot, but you can only do that once, maybe twice. You can certainly tax the wealthiest enough to fund quite a bit and if you pick the right things you can do a lot of good. It's just not enough to reshape society, which seems to be what most think would happen.
What I see as the biggest issue is the amount of societal damage these people are willing to do to amass their fortunes. I don't even care that Bezos is worth $250 billon, if he didn't exploit workers and deliberately destroys other business to accumulate that wealth. Same with Zuckerberg, he can be as rich as he likes, but he can't build that wealth of spying on users and generally being a dick. Musk... He can build all the cars and rockets he like, but stop undermining democracy through financial means.
Taxing billionaires hard won't stop their bad behaviour.
samiv
If the US government is 30 trillion dollars in debt someone is 30 trillion dollars in credit.
The money doesn't disappear. Now the problem is (in the context of United States) that the number #1 and #2 creditors are People's Republic of China and Japan. So the US cannot tax those entities.
But they can tax domestic creditors and wealthy individuals.
"Let's tax Zuckerberg half of his wealth, that's roughly 2% of the US budget. That's a lot, but you can only do that once, maybe twice. You can certainly tax the wealthiest enough to fund quite a bit and if you pick the right things you can do a lot of good. It's just not enough to reshape society, which seems to be what most think would happen."
No, the point is that you can do it over and over again.
Once you put that money into the economy it will flow all around it and most of the money will end up in the same place again. I.e in the bank account of Zuckerberg and it can be taxed again.
mrweasel
If we stick to Zuckerberg or Musk, a lot of their money isn't real, you can't really tax it directly. They'd have to offload a crazy amount of assets, including stocks. They'd lose a lot of their value if you had to sell it all of at once.
It's only real in the sense that they can use it as securities for loans or purchasing other assets. I'm not an economist, but it sounds like that would slow down the wealth generation of the riches people, and that would mean less taxable wealth next year.
You may be right. I still think address the increasingly egotistic and damaging behaviour would be better.
logicchains
>Once you put that money into the economy it will flow all around it and most of the money will end up in the same place again. I.e in the bank account of Zuckerberg and it can be taxed again.
Money is not value, it's a proxy for value. By taxing capital and using it on handouts, you're essentially burning that value; it's like a farmer eating all their seeds rather than saving some for the next year's crop.
tzekid
In modern societies: top 1% of earners pay roughly 30% of taxes top 5% pay 65% of taxes top 10% pay 80% of taxes while bottom 50% usually barely make 2% of taxes.
Heavy redistribution of wealth is already in place and it's not making things better.
samiv
"Heavy redistribution of wealth is already in place and it's not making things better."
You're right, because the distribution is removing large groups of people from the economy.
Just for reference, this has been done before and it produced possibly one of the best economies (at the time) and it was very social democrat. This was the United States after the so called "New Deal".
https://en.wikipedia.org/wiki/New_Deal
And just to make it crystal clear, we're not talking about taxing working people. We're talking about taxing the obscenely wealthy people who just sit on massive amounts of wealth, whether it's stocks or property or yachts or mansions or gold and jewelry. You know the > 10-1000x millionairs
myrmidon
Sure, but how "heavy" is that redistribution though?
Top 1% paying 30% of taxes sounds like a really rough deal for them at first, but if those 1%ers already own over 30% of your country in the first place (which is the case in the US), then thats barely their "fair share", and you are not really achieveing any redistribution at all.
How can you be certain that the problem is "progressive taxation is not working" instead of "taxation does not help against wealth inequality because it is actually barely progressive"?
hnhg
Also the top 1% covers everything from the very affluent middle class to billionaires - the distance from the least rich part of the 1% to the richest part spans billions, much greater than the rest of the distribution's 99%.
ulrikrasmussen
But the top 1% still pays proportionally less of their wealth in taxes than the bottom 50%. Yes, they may pay a large fraction of the total taxes, but with what they own they should pay even more.
I think another big problem is that this extremely uneven distribution of wealth is a basic democratic problem. The reason we have states is, among other things, to put the allocation of our finite resources under democratic control. If the majority of those resources are on private hands, then states get less control and our votes have less power.
AlgorithmicTime
[dead]
misterhill
A lot of people survive and tolerate a lifestyle that comes from these redistributions of things to people who no longer have direct access to means of survival like water and land. You really have to qualify what you mean in better.
Many rich people with heads should consider that the current situation is making things better than the next version of the French Revolution.
logicchains
>Many rich people with heads should consider that the current situation is making things better than the next version of the French Revolution.
The French Revolution was a revolution against the French government, and its high tax policies.
robin_reala
I’m not sure how your second statement follows your first? It’s implying that your numbers are “heavy” but not backing it up.
thinkcontext
> Heavy redistribution of wealth is already in place and it's not making things better.
Really? Universal education and healthcare don't make things better?
koonsolo
Do you have a source for this?
myrmidon
I think increased automation and now AI are making wealth inequality problems inherently worse.
The existence (and prevalence) of food delivery work alone is a depressing portent in my view: If delivering food for objectively shitty pay is still a viable option for a lot of people, that signals to me that human labor has become borderline worthless (even in a wealthy/developed environment).
That makes the "american dream" (=> start from nothing, do a good job, become wealthy) increasingly less realistic.
I'm also afraid that this (preventing wealth inequality from getting out-of-control) might be a "practically unsolvable" problem for democracies in general (just like managing housing and public pensions): It is too easy to "sabotage" democratic progress for the negatively affected minority (and that minority is exceedingly powerful/well-positioned, too).
barney54
AI hasn't had an impact yet.
Automation is great and has made things undeniably better. In the 1800s, 30% of the US GDP was tree cutting. https://x.com/AlecStapp/status/1939912893102760063 Before automation, nearly everyone was involved with agriculture. Today is much better.
myrmidon
I'm not saying that things are necessarily gonna get worse-- just that human work decreasing in relative value creates huge (new!) problems for our current wealth distribution mechanisms.
Maybe there is an easy way to have our cake and eat it, too (like consistent wealth taxation like the article suggests), but I'm doubtful.
In the past, basically every form of investment used to involve human labor to some degree-- meaning that every rich industrial magnate also automatically created opportunities for zero-net-worth workers/builders/employees.
But when your big investments just become server racks and industrial robots, then you no longer have this balancing mechanism, and you probably need to do something to prevent wealth concentration without bounds (and to guarantee opportunities for "worthless" individuals).
int_19h
Anything that increases productivity per person creates a potential for increasing wealth inequality, because the more each person can create, the more can be taken away from them by someone else. Pre-agricultural societies generally tend to be very egalitarian with no clear economic elites, but you start to see the wealthy elite class manifest in those of them where even without agriculture per-person yield is so high (e.g. PNW Salish) that it's possible for a few people to live off the surplus generated by the rest. Agriculture gives a massive boost to yields, and all societies that went down that route quickly lost their original egalitarianism. AI is just another step down the same road.
But note that this is a potential, not an inevitable outcome. This outcome is more likely because there is a positive feedback loop at play here: if you can somehow force people who generate wealth with their labor to surrender part of that wealth to you, you can use those resources to improve your ability to forcibly exploit others (e.g. by hiring more armed goons in a primitive society, or by bribing politicians who pass laws that are ultimately enforced by "public servant" goons in a more advanced society like ours). Simply put, wealth can buy power, and the resulting increase in power disparity can be used to extract more wealth from the people producing it. Thus the natural trend of technological advancement is towards income inequality ... but a society can still go against the current, it just takes a lot more effort on behalf of the citizenry.
ta1243
In the US, over the last 45 years, work has increased in value about 3.5% a year, and the S&P about 9.5% a year.
Work is not valued, wealth is.
myrmidon
This is exactly what I mean-- I think also the whole housing affordability is just another side of this coin: Buying a home grew more expensive (in terms of median income) for decades, and that alone is a huge problem in my view, with no realistic solution that I can see (=> except demand implosion from a shrinking population, which would probably create twice the amount of problems that it solves...)
ta1243
Housing costs in the western world is the root cause of everything. Housing costs on a monthly basis increase to take all income, because the demand for housing is higher than the supply.
You can't simply reduce your consumption, because you are reliant on everyone doing the same thing.
Rent controls don't help because that means housing simply has to be rationed in another way which is typically worse.
The solution is to increase housing supply in high demand areas.
bluecalm
Why would you compare a unit of work (say an hour) to a cumulative index? It just doesn't make any sense to compare those two values.
ta1243
An hour of work buys far less of a percentage of the value of US companies than it did 20 years ago.
in 1983 a single "share" in the S&P, or a single unit of American business, cost $120, about 13 hours work at the median wage then of about $9/hr.
Today you would have work for about 200 hours at the median wage of $30/hr to buy the same single share ($6200)
Companies have ballooned in value relative to median earnings. And top 10%ile earnings too for that matter.
rckt
Considering how everything is rigged in favor for the rich I don't have high hopes for this. But it would be great if they really come up with a system that makes sense and offers equal tax regimes for everybody. Right now if I'm not mistaken in Spain the most taxed people (in terms of ratio) are those who earn < ~300K per year.
diggan
> Right now if I'm not mistaken in Spain the most taxed people (in terms of ratio) are those who earn < ~300K per year.
You are mistaken. Currently, the higher income you have here, the higher tax rate you have, where the highest tax rate on income sits at 47%, which you get hit by when your income is above 300K/year. People between 60K and 300K sits at 45%.
And then there are regional differences, someone in Andalucía don't pay the same amount of taxes as someone who lives in Catalunya for example, where the top tax rate is 50%.
Even taking into account other taxes we have, you still end up paying more in taxes the more you earn, unless you start engaging in schemes to lessen your tax burden, obviously. Although the social security is capped, so it does increase slower once you go beyond the cap, but it doesn't start regressing which your comment hinted at.
Edit: important to note that the tax rates are all marginal tax rates, maybe that was a bit unclear.
foota
Wow, a 45% tax starting at 60k is kinda unreal.
diggan
Why is that? Sure, not all of it goes directly to people who need it, but I generally feel fine paying that amount of taxes, because I myself got helped by others paying taxes when I was dirt-poor but still needed to go to the hospital.
If/once you reach that point (+60K/year), you already live a above-average life, why not share some of that with others who aren't as good/lucky as yourself? Seems like a no-brainer to me, but I might be too European to really grasp the problem.
disgruntledphd2
Try Ireland, 48% starting at about 45k.
Fun fact, Ireland has one of the most unequal distributions of income in the EU pre transfers/taxation, and one of the most equal distributions of income after taxes and transfers.
So this stuff sortof works.
More generally, taxation of wealth is generally a good idea, but it needs to be over as many countries as possible to avoid people just moving.
You can accomplish most of the same goals by taxing property, as that's most of global wealth and it's harder to move.
You also need to handle the extreme top of the distribution through some kind of taxation on stocks/investments but property tax gets you most of the way there.
ta1243
That's about 3 times median income in Spain.
In California someone on the median personal income of about $50k pays 18% income tax. In Spain (Madrid) someone on the median income of about €23k pays 19% income tax.
Double the median income and it's 27% in California and 27% in Spain
Four times median income and 33% California, 34% Spain
jonathanlydall
I'm surprised that you seem to be surprised. In South Africa it's not super far off from that.
Ignoring smaller tax brackets, income in the bracket of USD 48,500 to 102,900 is taxed at 41% with any higher earnings taxed at 45% [0].
On top of that we have 15% VAT on essentially everything we buy. Also, any "luxury" imported item, including all electronics, also has an additional substantial import tax on top of that, e.g. an iPhone is something like 9%.
It gets even worse though, if I want decent quality health care, education and security I have to pay for all of those privately. Between my wife and 2 small kids, we pay at least USD 10,200 extra each year, and that's not including occupational, speech and physio therapy my now 5-year old, but prematurely born, is needing at the moment.
An "advantage" for someone like me though is that a very large portion of our population is very poorly educated and thus cannot demand much of a salary, meaning that the domestic cleaner/child minder I employ is very affordable.
Just the other day someone pointed out that the middle class here might not get much for their taxes (as we're essentially subsidizing the majority who are poor such that they tend to pay nothing except VAT) but on the flip side we wouldn't have domestic workers and gardeners be as affordable.
[0]: https://www.sars.gov.za/tax-rates/income-tax/rates-of-tax-fo...
exe34
It's only 45% on money above 60k, it's not the entire paycheck.
WinstonSmith84
"kinda unreal" and still real - that's what's wrong with European countries in general. It's a lifestyle Europeans have chosen where you don't need to work a lot, everything is paid for you but don't expect to get rich either. This is a mentality deeply ingrained in people where there is little incentive to work. If you've ever been to Spain, you will have certainly noticed these graffitis "tourists go home" a bit everywhere, whether in Valencia, Sevilla, Barcelona or other touristic cities. That's really interesting to see, you've a lot of people there who just don't get it that a lot of the economy is based on tourism.
Anyway, ambitious entrepreneurs don't start business in Spain, they emigrate to countries with low tax rate where the chances are much higher that they won't go bankrupt after a year, and it's a vicious circle. Of course, the reaction now is that there are populists in Spain and elsewhere trying to dictate to other countries what their "wealthy" people shall pay in taxes :-)
Despite all the flaws of the US, let alone the ones of the current administration, keeping the economy competitive is the one thing that all US administrations have understood correctly, whether Dems or Reps or MAGA
swat535
> Wow, a 45% tax starting at 60k is kinda unreal.
Most people don't understand how taxation works; in many places, there is progressive tax, which means you are not taxed at 45% or 50% or whatever, but only on the portions you make above certain thresholds.
beAbU
60k in Spain goes a relatively long way.
eclecticfrank
Germany technically has a wealth tax. However, it is supended since 1997, because the methods of how real estate wealth was calculated were outdated and thus considered unconsittutional.
Tax is not collected, but the supporting law has never been revoked.
https://de.wikipedia.org/wiki/Verm%C3%B6gensteuer_(Deutschla... (Sorry, no translation available)
kleiba
Interestingly, the court order in question demanded that real estate should be taxed higher than the status quo - instead, the conservative government decided not to collect that tax at all any more.
Wikipedia claims that this decision was partly due to the max tax rate being at 53% at the time. Today, it has dropped to 42%, but for some strange reason, the wealth tax has never been reinstated.
GardenLetter27
This is the wrong way to look at the issue.
The super-rich don't stay rich by just sitting on their money, they invest it.
These countries should focus on encouraging investment there - by getting rid of bureaucracy and red tape, make it possible to hire across the whole EU a lot easier, without needing separate tax registration in every country, etc.
Lower the barriers to entry wherever possible - no long application processes for developments with endless consultations, no arbitrary minority language or qualification requirements, etc.
Income inequality is a good thing, but there needs to be equal access to education and opportunities and the lowest barriers to entry possible.
imiric
This is not so much about income inequality, but about making sure that the rich actually pay their taxes, or even more proportionally to their wealth when compared to lower income individuals.
Rich people will and should continue to exist. What they shouldn't be allowed to do is take advantage of loopholes and tax breaks just because they're wealthy. That alone should indirectly lead to lowering inequality, and, assuming we can trust that governments work efficiently and in equal interest of all their citizens (which is hardly a given), it should lead to a fair(er) distribution of wealth, instead of a growth of inequality.
In any case, it's easy to be cynical about this news, but it's a step in the right direction on paper. In stark contrast to what is happening in the US, for example.
bluecalm
>>This is not so much about income inequality, but about making sure that the rich actually pay their taxes, or even more proportionally to their wealth when compared to lower income individuals.
Sounds like you want to tax assets. Every country can start doing it right now with assets on their soil. No "global registry of wealthy people" is needed for that. Just look at the assets you control and tax them.
consp
Assets can be easily hidden by elaborate constructions over multiple nations, if you have the money to finance it you can save millions with it. Is it legal? Maybe yes, maybe no. Is it something desirable to society? No. This is why you need a registry.
disgruntledphd2
Yeah, this is possible. At an EU level it would probably work. It would be even more effective in the US because they charge tax on global income for citizens, regardless of residence.
regentbowerbird
> The super-rich don't stay rich by just sitting on their money, they invest it.
The specific issue here is that revenue from capital is taxed less than revenue from labor, thus disproportionally impacting the poor & middle class.
Can you explain how taxing the rich even less will solve this issue?
GardenLetter27
Then the solution is to cut taxes on income, and cut government spending.
Ideally there'd just be a 10% tax across the board - sales tax, income tax, etc. like the https://en.wikipedia.org/wiki/9%E2%80%939%E2%80%939_Plan
No complicated exemptions, or complicated progressive bands, just keep it simple and eliminate bureaucracy. Then people can manage their own pensions and insurance.
This could be accompanied by a Georgist Land Value Tax to encourage development and innovation too.
notrealyme123
thats way more than currently most working jobs get taxed, and way less than returns for invested money gets taxed (at least when using "smart" tax strategies).
So yes, tax the rich +1
ur-whale
> Ideally there'd just be a 10% tax
With the added value that it mechanically keeps governments lean and fit, instead of the bloated, taxpayer money wasting leeches that they are in most socialist countries.
Socialism, a.k.a. a picture perfect example of the maxim "The Road To Hell Is Paved With Good Intentions".
High taxes that supposedly lead to social justice via re-distribution of wealth ALWAYS end up driving countries into the same ditch: gross abuse of public money making the poorest part of the population suffer the most.
Look at Venezuela, California and Cuba for perfect examples. Spain is not far ahead of them, check out their sovereign debt in case you have a doubt, and how many times they've had to be bailed out.
And if you have doubts that low taxes lead to healthier societies, it is indeed possible, I'd invite you to take a look at Switzerland, where taxes are super low, the institutions work like well-oiled Swiss watches, crime is quasi non-existent, infrastructures work, corruption is one of the lowest in the world and - yes - there are filthy rich people (who gives two fucks if they're rich? As long as your life is good. Unless jealousy of course.) but the so-called "poor people" in Switzerland have a way better life than most supposedly rich people in the rest of the world.
lordleft
Is this not the same trickle down mantra that has been pushed across developed countries for decades and has only widened the gap between rich and poor? In the US, where this line was pursued since the 80s, real wages for most Americans have stagnated while the top 20% have seen their wealth increase astronomically. Merely improving the regulatory and investment climate for a country does not magically benefit most citizens in a society -- thoughtful taxation is one to correct that.
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twoodfin
The median American household has a >30% higher real income today than in 1985.
https://fred.stlouisfed.org/series/MEHOINUSA672N
Personal income is up more than 50%.
https://fred.stlouisfed.org/series/MEPAINUSA672N
And that doesn’t account for demographic changes: Households are smaller on average than 40 years ago and there’s been a significant surge in the foreign-born population, mostly from much poorer origins.
Further, while the inflation calculation includes some hedonic adjustments, it’s really hard to capture the aggregate of the thousands of diffuse lifestyle benefits of living in 2025 v. 1985. Personally, I’d miss burritos.
myrmidon
Sure, but a median house cost 3.5 years of (median) income in 1985, nowadays its 6. It sure is nice being able to afford tons of foreign-built electronic trash, but affording a home seems more relevant and important to me and by that metric things got worse.
bestouff
> Income inequality is a good thing
That's your opinion. I fail to see how the differences were have today make sense and could be good for the society.
newsclues
Take the global wealth, divide it by the population, and redistribute it evenly.
Suddenly a lot of productive assets are no longer working.
Do you think capital allocation will be better when it's being done by everyone?
johnecheck
Bad take. Obviously if you you cut a factory into a million pieces and hand them out, you've lost value.
Investment tools cover all your concerns here. (Hopefully paired with a regulatory framework that prevents scams (looking at you, crypto))
samiv
This is wrong.
The rich people are stiffling the economy and displacing a large swath of working people. This process will hollow out the economy and produce more poverty and more inequality.
For the wealthy people there are two ways to invest.
1. Invest in passive assets such as stock market, property, valuable items, gold etc. 2. Invest in new businesses.
What are they doing? Mostly 2. How do we know. Simple.. look at the real economies. The western economies are growing (barely) at around 1-2% per year. The wealthy (since pandemic) grow their wealth at 10-20% per year. Where is this growth coming from? Certainly not from new business development since the real economy is not growing. The only way it can come is by taking a bigger slice of the pie, i.e. displacing middle class by subsuming their wealth.
This is harmful to the economy and will lead to the collapse of the economy and the society.
GardenLetter27
You are right that the problem is a lack of economic growth - and that is what must be addressed, e.g. by removing bureaucracy and harmful regulations.
Robert Zubrin's The Case For Nukes is a great book on this.
samiv
The bureaucracy and the regulation isn't the problem by and large. If anything it just needs to be easier and more automated to navigate the regulation when setting up business.
I know that the capitalist really like to sing this song. "It's the regulation, just let us self regulate and we'll create so and so many jobs".
Yeah, just like they did in the 1800 hundreds. Abysmal working conditions, minimum pay, toxic waste dumping etc. etc.
Or how the banking sector has managed to blow up several times since "deregulation" in the -80s by Reagan. 2008 market crash anyone?
The problem is that there's less and less purchasing power. Even if you have a proven business case such as hairdressing or serving food your most important asset is a customer base who have money. You start by putting money in the pockets of the people and suddenly all kinds of lucrative markets and business ideas become viable.
The regulation is needed to protect the society from all the harmful shorcuts that businesses would otherwise take. Such as poisonous food, toxic waste dumping, ponzi schemes and insider trading etc. etc.
bluecalm
>>The western economies are growing (barely) at around 1-2% per year. The wealthy (since pandemic) grow their wealth at 10-20% per year.
Imagine you are in Germany:
-you have a business that has modest profitability of 4% per year (profit/company value)
-your economy grows 1-2% per year
-your inflation is 2% per year
How much do you expect the company value to increase after a year? Right, it's 8 % - exactly how much DAX (German stock index) grew on average during last 10 years.
aredox
They invest and then they extract ridiculous rents from their investments - leading to widespread burnout, perfectly fine businesses being closed and employees being laid off because they don't give double-digit returns, empty shop spaces because it would diminish their value to lower the rent, excessive appartement rents, etc.
And an economy oriented only along the wishes of the super-rich.
Money is the way you "vote" into the economy, and the more money is in the hands of a few, the less the economy actually adresses the needs of the many.
GardenLetter27
The housing crisis isn't due to investment, but onerous government regulation that makes it near impossible to build - decades-long planning processes, dozens of consultations (local public, and NGOs, etc.)
That's exactly what I mean by removing bureaucratic processes to unlock investment.
But the "many" can learn useful skills and innovate to also make a lot of money. Everyone should be able to start a business easily - without excessive capital requirements or expensive notaries. STEM education should be free and widely available (or with very low interest loans if we let the loan interest be decided per subject, per student grades, etc.)
cloverich
Investment in sfh definitely plays a major role. It's not an either or situation. Build more houses. Make SFH investment homes unprofitable. Both will increase the homes on the market, lowering prices.
bluecalm
>> perfectly fine businesses being closed and employees being laid off because they don't give double-digit returns
Sounds like an opportunity to me.
>>empty shop spaces because it would diminish their value to lower the rent
Sounds like a problem land value tax solves - it should cost you to hold land ad if you can't pay you should give it up so others can make use of it.
>> excessive appartement rents
Sounds like land value tax + removing bureaucracy around building should solve that.
>>And an economy oriented only along the wishes of the super-rich.
I am not sure why you think anything in EU is along wishes of super-rich. It seems to me it's to the wishes of political cronies. I can guarantee you that "super-rich" would structure it differently.
>>Money is the way you "vote" into the economy, and the more money is in the hands of a few, the less the economy actually adresses the needs of the many.
And yet populist parties introducing anti-business policies win all the time. It's true our parliamentary systems are terrible and undemocratic but it's not because super rich, at least not in EU.
usrusr
We've seen effectively zero interest rates for longer than many can remember. If there's no investment it's not because of lack of capital but because of lack of optimism. When generationally rich do invest in something outside the safe game of landlordship (which is primarily defined by limited supply making chart lines point northeast just by merit of more capital joining the game) it's usually not because of n aeed or greed, but because they already have so much invested in the easy game that they feel a desire to risk some tiny fraction of it in something more exciting.
exiguus
Actually, there are plans to tax international investments at 1% [1] (i.e., making more money with money). This will basically stop bets on currency or commodities on the stock exchanges. Besides that, inheritance and wealth tax are also interesting fields for a regulation.
[1] https://www.europarl.europa.eu/workingpapers/econ/107_en.htm
alpaccount
I've replied to a comment with this but I'll leave it here.
Reducing inequality in Brazil (even a tiny amount) is a DEAD SIMPLE problem that is not in any way related to the government taking more money from people (rich or poor), but, rather, in taking LESS money:
> The collection of federal taxes on the reserve base, shows that of the amount collected by the IRS of Brazil, the majority of the taxes are based on consumption, with approximately 53% on average of the funds raised by Revenue Federal Brazil and continue accounting for more than half of tax (52%) charged by the agency. This tax structure is even more perverse when we add the taxes collected at the state and municipal levels, which bring in the largest source of revenue. The tax burden on consumption is regressive. In Brazil those who earn up to twice the minimum wage spend 26% of their income to pay indirect taxes, while the tax burden for families with income higher than 30 times the minimum wage amounts to only 7%. Excessive taxation on consumption depresses demand directly affecting the economy, reducing the consumption of the middle and lower income families.
We're talking about a country where minimum wage is 260ish dollars a month, and a macbook costs TWICE what it costs in the US, where people make much more. We're structured in a way where only rich people have access to anything. You can tax said rich people more, but they'll just keep being the ones that can afford anything at all.
v5v3
If Spain can get support from across the EU. And Brazil the same from BRICS then we could see change.
Best not to hold your breath though...
graemep
A lot of EU countries have enormous tax breaks for the rich.
There is a consensus that non-dom status (basically rich foreigners, very broadly defined, pay hardly any tax) in the UK needs to go. The main point made by people opposing this is that they can easily move to a number European (mostly EU) countries that have similar schemes and still only be a short flight away from the UK.
bluecalm
I don't understand why politicians call for taxing assets but fail to tax assets they control in their own country. Why are super rich non-doms a problem in UK? Oh, they own a lot of land and real estate? You can tax it right there.
Or maybe I do understand - it has nothing to do with trying to fix the problem but is just a populist agenda that sounds good and helps with winning elections.
graemep
Why should people living an a country not pay tax in that country? its a general principle that you pay tax on your income to the government of the country you live in.
If you regard progressive taxation as "populist", fine. I regard it as simple being fair.
To put it another way, why should there be a special exemption so super-rich foreigners do not have to pay tax?
> To put it another way, why should there be a special exemption so super-rich foreigners do not have to pay tax?
I do not know what you are referring to here. The non-dom issue is primarily about taxing income.
v5v3
People in the UK and other countries are heavily taxed at source. And they see it on their monthly wage slip.
And many people don't do a job they love, they do it as they need the money, and are miserable.
The 'look at at that group who are not paying their share and the party in charge is responsible , but we will change it if you vote for us' is one of the easiest plays to get votes and volunteers campaigning for you.
raverbashing
BRICS is just an acronym, it is void of any meaningful significance other than that.
Edit: "oh but it's an actual organization" yeah with still very little significance between pretending it's anything but a convenient proxy for the bigger members
diggan
> BRICS is just an acronym, it is void of any meaningful significance other than that.
I think your understanding of BRICS might be slightly outdated, did you read about the last time in the late 90s or something? It's beyond just an acronym today, with institutions actively involved, new initiatives and more.
gchamonlive
It's an actual organization actually, founded in 2009. They hold meetings globally, the next one set to be held here in Brazil in 4 days. Since it's an organizational to align economic goals among other topics, it's not unthinkable to have these kinds of discussions about progressive taxing. We can question the real effectiveness of BRICS for actually taxing the rich more extensively, but it is surely much more than an acronym.
v5v3
Yes. It is the 2nd most powerful alliance after the USA/Canada/Australia/Europe one.
India seem a flaky member of the Brics, but rest seem very committed.
raverbashing
Yes. An organization that lacks any meaningful action besides bureaucratic merry-go-around
It's a puppet show essentially
impossiblefork
I don't think, just an acronym, but my impression is that the only thing BRICS or BRICS+ agree on and are actively co-operating to achieve is collectively getting off the dollar and ending the effects of the so-called exorbitant privilege on themselves.
owebmaster
If that is the "only" thing, it is quite the ambitious goal
throwawayb2025
Forcing rich people to invest in low return area might be better strategy. If they know how to make money productive, they can make that area grow faster so that gdp can grow faster. This will ensure rich people money grows at higher rate only if gdp grows. Asking government to manage money is very in efficient.
rebanevapustus
> Brazil One of the most violently unequal countries on the planet. Very proficient however in virtue signalling.
Propelloni
Like I said elsewhere, virtue signaling is moving the Overton window. It works pretty well for the alt-right, so we know it is working.
Reading the press release shows me that Spain and Brazil are aware that this is a hard problem. They are especially aware that a nation, or two nations, alone cannot solve it, thus they suggest a "global registry", which is basically a "abolish tax havens" again. Let's see how far we get this time, I wish them all the best.
octo888
Also let's not forget Spain's endless corruption scandals. You aren't going to tax the people giving you money
diggan
> You aren't going to tax the people giving you money
Lol, why are we still being taxed then?
We do have endless corruption scandals though, that part is pretty accurate, but they still tax us like there is no tomorrow. At least we have pretty good healthcare, so it isn't all doom and gloom like the "news" want us to believe.
octo888
I meant: you're not going to tax the people giving you bribes.
Are you bribing politicians LOL? I hope not
null
skirge
health insurance contribution is considered as tax in Spain?
owebmaster
Taxing wealth-extracting foreign corporations is a way to have resources to fix the inequality.
mvid
“The problem isn’t solved, so how dare they try to solve it”
pennaMan
They are not trying to solve it. They are pretending to solve it by masking the underlying issue and making things worse in the proccess.
actionfromafar
I don't have high hopes it will solve anything, but I'm also not sold on it making anything significantly worse.
exe34
Worse for whom? If it's for people richer than me, I'm okay with it.
cucubeleza
Brazilian government is dumb as hell, just tax everything and waste money with idiot things and a lot of corruption, tax the rich will make then flee to another country like Arab Emirates or USA, so more money for then, less for the country, extremely common L of the Workers Party
mafuy
So what do you propose instead, since you seem to figured it all out?
cucubeleza
cut unnecessary spending (Brazil has TONS of it), cut taxes, cut bureaucracies and not hide inflation like they do it's a good start. And you, what's your propose? You also thing that tax rich people will make the other side richer?
alpaccount
> cut taxes
Yep, this is absolutely correct. I don't see how people don't realize this, the simplest way to make brazil less unequal is to REDUCE tax!
From wiki: > The collection of federal taxes on the reserve base, shows that of the amount collected by the IRS of Brazil, the majority of the taxes are based on consumption, with approximately 53% on average of the funds raised by Revenue Federal Brazil and continue accounting for more than half of tax (52%) charged by the agency. This tax structure is even more perverse when we add the taxes collected at the state and municipal levels, which bring in the largest source of revenue. The tax burden on consumption is regressive. In Brazil those who earn up to twice the minimum wage spend 26% of their income to pay indirect taxes, while the tax burden for families with income higher than 30 times the minimum wage amounts to only 7%. Excessive taxation on consumption depresses demand directly affecting the economy, reducing the consumption of the middle and lower income families.
Taxing the rich will solve nothing (and let's be honest, this government is not aiming nor has the capacity to enforce it). Something much simpler is just let people be able to consume things, by removing taxes and cutting spending (probably not even necessary given how much the state already takes from its people).
Super simple, but, as usual, we love to overcomplicate it and play the popularity game.
solstice
Trevor Noah had a good take on the absurdity of stocks and unrealised gains with their Schrödinger's-cat-like qualities: https://youtu.be/Gqlbn2nPO-A?t=84
thisIsAtest25
How are they going to do this? If they increase the tax burden on people's salaries, they'll start working informally (I live in Brazil and currently see that people look for various ways to escape income tax, whether by opening a company or choosing not to register formally (and they're not rich, but the state considers them rich, even earning ~$32k per year)). If they force companies to pay, the tax burden will be diluted into products/services, falling on the poorest. The right path is to reduce the size of the state - these policies will only make life worse for the poor. In a world with scarce resources, this problem has no solution.
tsimionescu
The state is the solution to this type of problem. Reducing the size of the state only serves to take resources away from democratic control and into the hands of private entities.
thisIsAtest25
In a perfect world without greed and corruption, I would agree with you. However, I live in Brazil, where the state is constitutionally mandated to provide all basic necessities (healthcare, education, etc.) and we have one of the highest tax rates in the world. Additionally, corruption here is absurd.
Despite having enormous budgets, the services the state provides are inadequate. Many people choose to sacrifice an additional portion of their income (on top of what they already pay in taxes) to access these services privately. Even with extensive social policies and taxes on virtually everything you do — salary, consumption, transfers, inheritance, literally everything — quality of life remains poor. High tax rates actually breaks development.
We must be cautious about supporting policies that tax the wealthy more heavily, because when the state considers someone earning $2,000 per month to be 'rich'—which already happens, as evidenced by the current income tax brackets (IRPF)—these measures won't improve anyone's life.
alpaccount
Absolutely spot on:
> Many people choose to sacrifice an additional portion of their income (on top of what they already pay in taxes) to access these services privately.
In Brazil you pay taxes which are supposed to grant you health care, education, safety. None of that happens, so you pay (again) for private school, healthcare, insurance and so on. Anyone that lives/lived there knows this.
alpaccount
The state is anything but the solution in the Brazilian scenery. Full of incompetent/ignorant people who only have ambitions of further enriching themselves.
The brightest minds leave the country or aren't able to reach its full potential.
We're talking about a country where the government has repeatedly been found of the largest corruptions schemes in human history.
logicchains
> Reducing the size of the state only serves to take resources away from democratic control and into the hands of private entities.
The state is just private individuals with a monopoly on violence. The incredible degree of corruption in Brazil wouldn't exist if people working for the state didn't have any special privileges.
I hope this works. The only way to save the economy and the society is by taxing the rich.
Think about it for a minute. The rich people hoard all the resources, financial assets, means of production and in the competition for resources they will (and are doing so) displace everyone else in the economy (and really from society also).
This means that those who are displaced have no means to participate in the economy. And not only that but also they will be pushed to the fringes of the society and exists in slum conditions. This will stiff the economy and hollow it out.
Let's say for arguments sake that the government taxes X hundred of millions of $ from the bezos/musks/gates/etc. and put that into the economy by
All that money will immediately go back into the economy stimulating all kinds of economic activity. And essentially two weeks later that same X hundred million is back in the bank account of bezos/musk/gates and it can be taxed again!By letting the uber rich hoard the wealth that wealth is essentially away from the economy providing very little economic activity.
In economy this is known as the "high propensity to spend". The "poor" (i.e. working/middle class people) have high propensity to spend, the rich have low propensity to spend.
Tax the wealth, not the work!
This has been done before and it can be done again!
https://en.wikipedia.org/wiki/New_Deal