> I'm not really seeing the downside of arbitrage.
The downside is that you're failing to do the thing you set out to do. In theory the rich person (say $1,000,000 in income) places a high value on their time, so you impose a higher fine on them (say $20,000) to try to deter them. But the Uber driver only makes $20,000 total, so the fine for them is only $400. Meanwhile a middle class person making $50,000 pays $1000 -- 2.5X what the rich person incurs (assuming the fine the Uber driver pays is amortized over the fares).
> Do you have a better example?
Name basically anything that incurs a fine. A rich person who wants to do it and is "deterred" by the high fine just hires a poor person to do it for them. This is often what they do anyway because it saves them the labor independent of lowering the fine.
> I doubt people driving as a business are all that eager to lose their license.
But that has nothing to do with the fine, it's a separate penalty which doesn't exist in most other categories, apparently isn't sufficient (everybody speeds anyway), and the incentives of the driver and passenger are already aligned. They both want to get there faster, the passenger to save time, the driver so they can get another fare sooner.
I think you're presuming the loophole here a bit too quickly. It shouldnt be difficult to determine when it is that a wealthy person hired a less wealthy person to do the unsavory thing in order to exploit the lower fine.
More to the point brought up about Finland's lower wealth inequality: yeah, that should be what we're shooting for. Say we return to a robust progressive income tax system where if you make over say, 10 million dollars a year, you get taxed 90%. The arbitrage loophole doesnt work because, what, are you going to split up your 10M/Year income between 20 different less wealthy people and have them spend your money for you in order to avoid the tax?
What am I saying, of course the rich would find a way to skirt taxes. It's like, their whole shtick. I loathe the whole "Of course I'll do every shady, up to and including illegal things, to pay less taxes because if theres a loophole I want to exploit it". No, in fact you are acting being an anti-social cretin who neglects to give back to the society that produced the material conditions that allows for your wealth.
> It shouldnt be difficult to determine when it is that a wealthy person hired a less wealthy person to do the unsavory thing in order to exploit the lower fine.
How? You would have to prove collusion between them rather than just a normal contractor-type relationship where the contractor does something unsavory entirely of their own volition.
> Say we return to a robust progressive income tax system where if you make over say, 10 million dollars a year, you get taxed 90%. The arbitrage loophole doesnt work because, what, are you going to split up your 10M/Year income between 20 different less wealthy people and have them spend your money for you in order to avoid the tax?
Of course. That's exactly what happens in those types of situations. As soon as you hit the 90% rate, the next thing you know the spouse is on the payroll, or the kids, the parents, brothers and sisters, in-laws, cousins, friends of the family etc.
> What am I saying, of course the rich would find a way to skirt taxes. It's like, their whole shtick. I loathe the whole "Of course I'll do every shady, up to and including illegal things, to pay less taxes because if theres a loophole I want to exploit it". No, in fact you are acting being an anti-social cretin who neglects to give back to the society that produced the material conditions that allows for your wealth.
Right, which is why you need policies they can't avoid instead of ones like this which they can.
The best way to do this is a UBI funded by a flat tax. The rich can't arbitrage a flat rate and the UBI makes it progressive (meaning net transfer from rich to poor).
To the first point, good question. I dont know how we could solve that problem writ large.
As to UBI, I am all for it but I have concerns as well. Like a super basic one being what is to stop commodity prices inflating proportionately to the new lowest possible income set by UBI. Say UBI is 20k for every human on Earth. Great, but what's to stop the rise in prices of commodities to essentially UBI adjusted income + original price of commodity? Im genuinely curious what you think.
> Like a super basic one being what is to stop commodity prices inflating proportionately to the new lowest possible income set by UBI. Say UBI is 20k for every human on Earth. Great, but what's to stop the rise in prices of commodities to essentially UBI adjusted income + original price of commodity? Im genuinely curious what you think.
So this is always the argument people make against a UBI because it sounds plausible and the answer is complicated.
The first thing to notice is that the same concern is present for any method of reducing poverty/inequality whatsoever. If the poor have more money then they'll want to buy more stuff and by supply and demand the higher demand raises the price of certain products. It's a thing that happens.
But the only way it eats 100% of the money is if everything has zero price elasticity of supply. Which it doesn't. For example, if people want more land, well, sorry, the supply is pretty much fixed. But if people want more housing, that we know how to construct, so if more people could afford it then we could just build more. (If we have asinine laws against building more housing, well, that is an independent problem with an independent solution.)
And most of the things people want are not practically limited in supply. If more people could afford a sailboat then businesses would make more sailboats. If more people could afford new clothes then businesses would make more clothes. It's not as if there is an insufficient supply of wood or cotton -- for many products the dominant cost is the R&D or some other fixed cost and having more buyers could make the unit price come down.
The downside is that you're failing to do the thing you set out to do. In theory the rich person (say $1,000,000 in income) places a high value on their time, so you impose a higher fine on them (say $20,000) to try to deter them. But the Uber driver only makes $20,000 total, so the fine for them is only $400. Meanwhile a middle class person making $50,000 pays $1000 -- 2.5X what the rich person incurs (assuming the fine the Uber driver pays is amortized over the fares).
> Do you have a better example?
Name basically anything that incurs a fine. A rich person who wants to do it and is "deterred" by the high fine just hires a poor person to do it for them. This is often what they do anyway because it saves them the labor independent of lowering the fine.
> I doubt people driving as a business are all that eager to lose their license.
But that has nothing to do with the fine, it's a separate penalty which doesn't exist in most other categories, apparently isn't sufficient (everybody speeds anyway), and the incentives of the driver and passenger are already aligned. They both want to get there faster, the passenger to save time, the driver so they can get another fare sooner.