More evidence that the gig economy is actually making people poorer

[luisHK]

Not sure about Germany, but in neighbouring France where taxes while also progressive are even higher than in Germany, inequalities go increasing between the ones borns well off and the others, starting with school success and following in the professional life.
Germany has a much better reputation btw in regards to school providing good opportunities to most of its population, but the progressive taxes are not the only reason (France seems to have the most inegalitarian school system of the OECD countries if I recall properly some recent studies and it is just getting worse. Surprised France beats the USA on that topic btw, it might be worth digging those studies again, France might just have become the most inegalitarian school system in Europe, while at the same time beeing one of the most vocal countries against income inequality)
Also Hong Kong came among the top countries (the study qualified HK as a country, not me...) to be born for children in a study a few years ago, and that can't stem from polution levels nor great facilities for kids. Most likely it has to do with young locals getting a good shot at a decent life standard.

 

[luisHK]

Also HK inequality has to do with beeing a small place with a large concentration of ultra wealthy individuals, it doesn't mean much of the population is poor.
Where I used to live before, in Europe, the district with the highest Gini coefficient in the whole country, was also one of the most pleasant and most sought after. Ultra rich people living in the area raised that Gini coefficient, but life was quite nice for most of the population, with also top quality public services and public spaces, and average as well as median incomes well above the whole country's numbers.
The situation is probably similar in Monaco, high wealth inequality but one of the best places on earth to live for a relatively poor local.
Not quite the same in Hk btw, as many areas even downtown look rundown.

 

[CyJackX]

Disagree with your suggestion. I am strictly against progressive taxation. In fact I would prefer one flat income tax for everyone. It is a myth that a 20 or 25% tax will disable the poor from living and meaningfully participating in life and pursuing opportunities. What hamstrings the poor is lack of access to opportunities. We should never subsidize the poor, it achieves no purpose. What we should work on is to provide them with equal opportunities, and I provided many suggestions in the work place that would achieve that. Furthermore, the educational system in the US has to be completely restructured if the will is there (I know the will is not there) to provide equal opportunities. Just as in Japan or Germany or many European countries, we need to stop to worship private education. All education shall be equal. That means, whether a poor or rich person enters the educational system will have zero bearing on their future prospects and opportunities. That is how it works in Japan, in Scandinavia, in Germany. The poorest of the poorest can enter university virtually free of charge. That is what provides equal opportunities.

Furthermore, we need to stop the endless loopholes the rich enjoy. A progressive tax is a disincentive for the hard working and successful to invest and innovate. What we need is the loss carry forward system, private equity bs, offshoring of asset holdings to escape proper taxation, and especially we need to properly tax any assets, preferably simply at the same tax rate than a flat income tax. Calculations and numerous studies have shown that this would wash plenty enough money into the government coffers to provide completely free education for everyone and still leaves the government with huge surpluses. Furthermore, the government has to stop to cling on to 2% of GDP spending for defense. It is ridiculous to spend such amounts given one made the pledge to not play world policeman. Future wars will not be fought with conventional weaponry but it will be wars around information and cyber attacks. All those steps will provide the government with more budget surpluses than ever before. It will also greatly simplify tax code which will add billions in savings.

I left my home country a long time ago because I was charged close to 50% in income tax plus various social security taxes and it did not provide any motivation or incentive to work harder than I already did. It gave me zero marginal advantage to work harder because I would have even paid more, percentage wise, in taxes. Hence I find a progressive taxation to be counter productive.

I know I am talking about a virtually impossible scenario, because too much vested interest will fight such ideas. The rich are tightly in control and will do anything to prevent their virtually tax free asset investments to be touched. But one should be allowed to dare to dream, right?

Yes, rich tax loopholes have made the code relatively flatter and are damaging.
Education needs to be overhauled. Betsy Devos is gonna make it worse...
Tax any assets? Are you suggesting a wealth tax? I believe they tried that in France and saw a lot of capital flight.
Defense spending needs to go down, yes, but in the right places. They employ a lot of people, but they spend too much on defense companies.

I am ambivalent about a flat tax. While I enjoy the simplicity, a flat tax ignores the reality of cost-of-living. Even if "after-tax" pay is equal, "after-cost-of-living" is not. Thus, a flat tax puts more of a burden on lower earners once you subtract taxes and cost-of-living. Obviously it is relative what the bare-minimum-cost-of-living is, but I think it is fair to say that it is not negligible, and thus special considerations ought to be made for people who would be taxed into continuous poverty.

On another note, if we're considering dreamlike scenarios, a flat tax actually works very well with a negative income tax, providing the simplest structure for a UBI.

 

[Zzzz1]

I don't think you understand a thing about Hong Kong, so I don't see the need to debate this topic with you. Iequality in HK is actually not as bad as in the US. Other than some oligarchs that rule HK and foreigners who get a free pass the common man is not super well off but at at the same time has plenty more opportunities to rise up than someone born into poverty in the US. Education here is heavily subsidized, like most everything in this city is subsidized. If one wants to work hard then he/she has a pretty good shot at achieving something in life. The reason why many live in poverty in HK are different than you assume. Taxes for the poorer here are incredibly low, so your progressive tax achieves nothing in this town. And the city is filled with a fat budget. And just in case you wonder, I pay more in absolute taxes in this city than 95% of the rest. And I happily volunteer some of my free time for good causes. So, I I flat out reject your cynical suggestion of me being a freeloader. The issues that plague the US are very different than Hong Kong.

Will you eventually go back to your home country to live - consuming services others have paid for?

How do you feel that the "city-state" you live in ranks as one of the worst in inequality? Are opportunities more equal for the son of a street sweeper in Germany or in Hong Kong? You don't think progressive taxes have anything to do with it?

 

[Zzzz1]

We have to stop thinking with the mindset to want to make everything equal. This world is not equal, people are not equal, motivations and efforts are not equal. I believe the only equal thing we should strive for are equal opportunities. As a sort of equalizer for all the inequality. That's my steadfast belief.

Yes, rich tax loopholes have made the code relatively flatter and are damaging.
Education needs to be overhauled. Betsy Devos is gonna make it worse...
Tax any assets? Are you suggesting a wealth tax? I believe they tried that in France and saw a lot of capital flight.
Defense spending needs to go down, yes, but in the right places. They employ a lot of people, but they spend too much on defense companies.

I am ambivalent about a flat tax. While I enjoy the simplicity, a flat tax ignores the reality of cost-of-living. Even if "after-tax" pay is equal, "after-cost-of-living" is not. Thus, a flat tax puts more of a burden on lower earners once you subtract taxes and cost-of-living. Obviously it is relative what the bare-minimum-cost-of-living is, but I think it is fair to say that it is not negligible, and thus special considerations ought to be made for people who would be taxed into continuous poverty.

On another note, if we're considering dreamlike scenarios, a flat tax actually works very well with a negative income tax, providing the simplest structure for a UBI.

 

[newwurldmn]

So, I I flat out reject your cynical suggestion of me being a freeloader. The issues that plague the US are very different than Hong Kong.

That's good to know that you aren't like other European traders in HK: who go there to reduce their tax bill and then plan to retire back in their home countries of France and Germany.

I am also happy to hear that a street sweeper in HK who basically has to live in a dog cage can have the same opportunities as a street sweeper in Germany.

http://www.dailymail.co.uk/news/art...rlds-wealthiest-densely-populated-cities.html

 

[luisHK]

Sure, housing in HK is tough, actually even what's considered good housing there is cramped and ugly by most of the western world standard, but housing is also heavily subsidised, not sure how a local end up living in a cage (I actually found some answer to that reading the article, still i suspect if a local ends up in such an accomodation he messed up seriously along the way ).
As of retiring in Germany or France, Nothing wrong with that but this is not a free of tax all benefits proposition, move back there while having sizeable assets and living off capital gains and/or dividends and one will still pay much more taxes than the average population, even moreso in France with the wealth tax, and if one comes back with a comfortable pension from an overseas career in finance he still has to pay income tax.
If the guy is broke upon returning, yeah, it is mostly benefits, better than moving back to the US I suspect, but still poverty.

 

[newwurldmn]

Sure, housing in HK is tough, actually even what's considered good housing there is cramped and ugly by most of the western world standard, but housing is also heavily subsidised, not sure how a local end up living in a cage.
As of retiring in Germany or France, Nothing wrong with that but this is not a free of tax all benefits proposition, move back there while having sizeable assets and living off capital gains and/or dividends and one will still pay much more taxes than the average population, even moreso in France with the wealth tax, and if one comes back with a comfortable pension from an overseas career in finance he still has to pay income tax.
If the guy is broke upon returning, yeah, it is mostly benefits, better than moving back to the US I suspect, but still poverty.

Suppose you are a banker and earn 10MM Euros in HK. You pay 1.5MM in taxes and net 8.5MM Euros. If you go back to France, do you get taxed on the 8.5MM (or 10MM) or just on the income that 8.5MM produces?

 

[luisHK]

Wealth Tax taxes the capital, including real estate, so the 8.5million in this case, than the income it produces is also taxed . The details change regulary though , some governments introduced a "shield" so one doesn't end up paying more than a certain percentage of what he earned, but I remember reading of some french folks paying more in taxes than their total income.

 

[luisHK]

It's Daily mail, dunno what to make of the accuracy of what they write, to begin with :

'We're finding more and more illegal cage homes and the cost of living in them is rising. The average rent is about 1,500 Hong Kong dollars (£117) a year. If the landlord is kind they might charge $1,000, and that's for 15 or 18 square feet. "

No way it is nearly that cheap, this might be the price for a month.

Another article but from Business Insider about cage apartments in HK, which while depressingly small are still better than the cages shown in the Daily Mail, I wouldn't be surprised Daily Mail took the estimates of people living in very small insalubre lodgings in HK and had the reader believe they all live in those small metal cages, also many migrants seem to live in those places.

http://www.businessinsider.com/hong-kongs-caged-apartments-are-tiny-2013-2#