But how do you account for all the goods that wealth provides but which are not purchasable in a shop?

JM
(And in many cases you can acquire these goods without even spending your wealth.)

What would that be? Love?

Good phrasing of the same question in Marxian terms. The "*" operator ends up being a little bit sketchy, but it actually works OK for the simple sort of analysis you want. You're operating from an equation where labor*capital=wage+profit. The wage goes to the provider of the labor, and the profit goes to the provider of the capital.

The reason that wage and profit should be taxed differently is that the profit comes from the capital, which was initially formed by labor. It's not actually "labor*capital", but "labor*(labor*capital)", or even "labor*(labor*(labor*..." like a set Russian dolls.

Imagine that someone builds a shovel, which is used to dig a mine, which is used to get iron and coal, which is used to make steel, which is used to create construction machinery, which is used to make a drydock, which is used to make ships, which are sold to a foreign country. Applying taxes on the capital income side each step of the process ends up diminishing the value of the shovel-creator's labor most by hitting him with a long series of telescoping taxes, just because he happened to contribute very early on in the process - while the value of the shipmaker's labor is diminished the least through taxation.

Brought back to regular econ terms for non-Marxists: each time capital gains are realized and taxed, the present-discounted purchasing power of wage income earned several periods ago declines relative to the present-discounted purchasing power of wage income earned more recently.

That makes sense to me to a certain extent, but shouldn't everything go back full circle for the shovel maker at some point?

Also: it seems to me that if you're taxing the value of labor, nothing's much wrong here, no?

I must be stupid if I think money is only useful for obtaining goods and services.

privilege

So, the black market and bribes wouldn't get hit by a consumption tax. Oh no. http://www.discussworldissues.com/fo...s/rolleyes.gif

Okay, three things--the black market, bribes, and penis length compensation. Except status symbols still get taxed. So really, I think still two things.

But man, it's a real shame we can't directly tax feeling good about yourself. http://www.discussworldissues.com/fo...s/rolleyes.gif

The only reason money gives you any boost in social standing is that money can be exchanged for fancy things. If you can make a progressive consumption tax doesn't that cover conspicuous consumption?

The only status symbol that wouldn't get taxed is a suit vest made out of Benjamins. And by taking money out of circulation you're basically performing an act of charity to society, so I'd let that one slide.

The fact that you can walk outside at 11:33 pm and have a low risk of being the victim of a crime is just one privilege of your family's wealth.

I think that has more to do with living in a nice neighborhood (something that is taxed, by the way) than being rich.


xpost, gribby wins the race

How much is the property you live on worth? A property in a nice neighborhood is worth a lot more.

Looks like you should leave north Philly and move to Virginia. It might save your life.

I honestly don't feel like explaining why people shouldn't be punished for not choosing to live in a cesspool where they get mugged every other day.