6 ms·

How about taxing net worth of an individual? Calculated by market participants like they do today. Tax 0,1% of net worth of those whose net worth exceeds say $

How about taxing net worth of an individual? Calculated by market participants like they do today. Tax 0,1% of net worth of those whose net worth exceeds say $10 million. Such people have to get assessment of their net worth and then pay their tax. Of course they have incentive on doing slightly funny things with their net worth, but it is difficult to race them to the bottom in view of very large fines for crossing the line. Of course people will skip citizenship then; but as long as they do business within country it is solvable too.

koolba 10y ago
> How about taxing net worth of an individual? Calculated by market participants like they do today. Nobody in the USA has the balls to propose or implement this. It does make sense though. Why tax the guy making money? You should tax the guy hoarding it!
- WalterBright 10y ago
  No wealthy people hoard money. It makes no fiscal sense to do it. It's all invested.
  - Retric 10y ago
    It's hard to call T-Bills an investment and many wealthy people have quite a few of them, or other investments designed to hold value with minimal ROI.
    - WalterBright 10y ago
      T-Bills are loaning money to the government, who then spends it. Again, there is no hoarding.
      - Retric 10y ago
        Most T-Bills are simply servicing debt.
  - koolba 10y ago
    By hoard I meant "be the owner of". Doesn't matter if it's cash, real estate, stocks, bonds or shares in a lemonade stand. Call it all wealth and throw a % on it. Make it progressively increase up and 0% on anything less than $X. We could call it a Robin Hood tax. This will also have the incentive of causing the wealthy to invest in riskier things. Ex: 5% growth doesn't make sense with a 6% wealth tax. EDIT: Moved some sentences around.
    - WalterBright 10y ago
      I recommend sticking with the usual definitions of words, it prevents a lot of misunderstandings.
  - jandrese 10y ago
    Isn't this the point of Capital Gains taxes? I've never understood why the capital gains tax rate is lower than the rate for normal income. Capital gains are basically money you earn for having money and not being an idiot with it. It's one of the major ways the rich get even richer just because they are rich and how the wealth gap widens. From a 10,000 foot view it seems like it should be taxed at a higher rate than normal income, since theoretically the person had to actually work for their normal income which directly helped the economy and the country as a whole.
    - kamaal 10y ago
      >>Capital gains are basically money you earn for having money and not being an idiot with it. This is called 'investment'. It takes a lot of effort and time to be good at it. Also as long as inflation exists, one will need investments.
      - WalterBright 10y ago
        Most people are pretty bad at investing. Paying someone else to manage it for you is a great way to lose it, too.
    - WalterBright 10y ago
      > the person had to actually work for their normal income which directly helped the economy and the country as a whole. This is the Labor Theory of Value in another guise. Efficient allocation of resources is extremely important, and the LToV discounts that to having no value.
djrogers 10y ago
It would be way too easy to adjust your net worth, and assessing said net worth would be extremely difficult. Making the tax code harder and more complicated is probably not the answer...
- guard-of-terra 10y ago
  How can Bill Gates easily adjust his net worth? Market does assessing net worth pretty good today. I haven't said a word about making tax code harder. You can remove a LOT of tax code with this change.
herge 10y ago
Net worth, as in property value - mortgages? Most 'middle class' people have most of their net worth in their principal residence, so you'd be adding quite a shocking tax bill to a lot of seniors on fixed incomes who own their own house. That's the problem with Mark-to-market taxing. You could start added loopholes to your "block loopholes" law, like "If you reside in the property, it's tax free", but then you hit problems like parents given their kids properties as tax shelters, and the like.
- Retric 10y ago
  List is as an AMT. Also, $10 million * 0.1% = 10,000$ which is a tiny tax bill at that wealth level. If your paying less than 10k and have 10 million then somewhere something broke down. IMO, you would need a much higher number. A 0.5% wealth tax AMT would = a 25% tax on a 2% ROI or 8.3% on a 6% ROI. From an economic standpoint this is actually a good idea. People with lot's of unreolised income are often stuck with unproductive assets because selling them incurs a large tax bill. With this you can sell a reasonable chunk of your assets without incurring extra tax.
- guard-of-terra 10y ago
  "you'd be adding quite a shocking tax bill to a lot of seniors on fixed incomes" If there are unlikely seniors on fixed incomes with houses worth more than $10M, then they may pay this tax with shares in said house. When their heirs come into possession of that house, they have to buy those shares back. 15 years of tax will be 1,5% market price.
- antisthenes 10y ago
  What's wrong with seniors getting hit with a slightly larger tax bill? Besides, you could alwaysexclude the primary residence from the wealth tax to lessen the burden. It would either generate additional revenue or have them move to an area with cheaper houses/properties to avoid paying it, which would make space for young professionals who otherwise would not be able to afford it. I'm also venturing to speculate that a lot of seniors are NIMBYs, facilitating the lack of affordable development and re-zoning, in which case that's another argument to get them the hell out of their expensive suburbia.
DMac87 10y ago
How about starting by taxing many people's main part of wealth, their house, at market value (i.e. no Prop 13)? Let's not let perfect get in the way of good..
- st3v3r 10y ago
  The problem with that is that many people bought their houses back when they were much, much cheaper. So doing that would cause many, many people to be forced from their homes only for the crime of being one of the early people in an area that later became popular. Any policy that would cause people to be forced from their homes just because should be viewed as a failure.
  - jrock08 10y ago
    > Any policy that would cause people to be forced from their homes just because should be viewed as a failure. I have a really really hard time feeling bad for people who bought homes in the bay area in ~1980. They won the lottery. Their home grew 10% y/y for 30 years outpacing inflation by a significant margin. They got a 30 year tax break while their income likely outpaced inflation as well because they live in an extremely good job market. That house they bought for 100k is now worth 1.7 Million. They can sell the home, move basically anywhere else in the country, and retire on the remaining gain. Yeah, I'm having a hard time feeling too bad for them. On the other hand, the person who moved to SF in 1980 and decided to rent, I feel bad for them. Unless they found a rent controlled apartment, they've seen their rents grow 10% y/y, and if they found a rent controlled apartment they probably got evicted when the owners of the property sold it, and the new owners decided they wanted to redo the property as condos. Lets just call it what it is, rent control for rich people. Then maybe we'll talk about it sensibly and realize that it's a horribly thought out plan.
    - kamaal 10y ago
      >>I have a really really hard time feeling bad for people who bought homes in the bay area in ~1980. They won the lottery. >>On the other hand, the person who moved to SF in 1980 and decided to rent, I feel bad for them. Instead of punishing people for being successful. The latter people should ponder on their foolishness, instead of blaming other people for being more intelligent. Last time I check making good decisions about one's future is not a vice.
talmand 10y ago
Oh that's easy, as the hypothetical rich guy in the equation; I personally own nothing but the many, many companies I work for own the stuff I personally use.
- guard-of-terra 10y ago
  Who owns those companies? That's the one who will have to pony up.
  - talmand 10y ago
    As the hypothetical rich guy; as an employee I own none of these companies, it's a tangled web of ownership of companies owning companies. But sadly none of them make any profit and have very little in terms of capital. I even have to shut down a few every year due to failure, er... I mean companies have to shut them down, but the good news is I, um... they, create new companies every year! I'm a job creator! As long as we don't consider the tax consequences of such creation.
tim333 10y ago
Taxing net worth has been done. They have it in France and a few other places. I'm not sure it's terribly popular.

koolba 10y ago

> How about taxing net worth of an individual? Calculated by market participants like they do today. Nobody in the USA has the balls to propose or implement this. It does make sense though. Why tax the guy making money? You should tax the guy hoarding it!

WalterBright 10y ago
No wealthy people hoard money. It makes no fiscal sense to do it. It's all invested.
- Retric 10y ago
  It's hard to call T-Bills an investment and many wealthy people have quite a few of them, or other investments designed to hold value with minimal ROI.
  - WalterBright 10y ago
    T-Bills are loaning money to the government, who then spends it. Again, there is no hoarding.
    - Retric 10y ago
      Most T-Bills are simply servicing debt.
- koolba 10y ago
  By hoard I meant "be the owner of". Doesn't matter if it's cash, real estate, stocks, bonds or shares in a lemonade stand. Call it all wealth and throw a % on it. Make it progressively increase up and 0% on anything less than $X. We could call it a Robin Hood tax. This will also have the incentive of causing the wealthy to invest in riskier things. Ex: 5% growth doesn't make sense with a 6% wealth tax. EDIT: Moved some sentences around.
  - WalterBright 10y ago
    I recommend sticking with the usual definitions of words, it prevents a lot of misunderstandings.
- jandrese 10y ago
  Isn't this the point of Capital Gains taxes? I've never understood why the capital gains tax rate is lower than the rate for normal income. Capital gains are basically money you earn for having money and not being an idiot with it. It's one of the major ways the rich get even richer just because they are rich and how the wealth gap widens. From a 10,000 foot view it seems like it should be taxed at a higher rate than normal income, since theoretically the person had to actually work for their normal income which directly helped the economy and the country as a whole.
  - kamaal 10y ago
    >>Capital gains are basically money you earn for having money and not being an idiot with it. This is called 'investment'. It takes a lot of effort and time to be good at it. Also as long as inflation exists, one will need investments.
    - WalterBright 10y ago
      Most people are pretty bad at investing. Paying someone else to manage it for you is a great way to lose it, too.
  - WalterBright 10y ago
    > the person had to actually work for their normal income which directly helped the economy and the country as a whole. This is the Labor Theory of Value in another guise. Efficient allocation of resources is extremely important, and the LToV discounts that to having no value.

djrogers 10y ago

It would be way too easy to adjust your net worth, and assessing said net worth would be extremely difficult. Making the tax code harder and more complicated is probably not the answer...

guard-of-terra 10y ago
How can Bill Gates easily adjust his net worth? Market does assessing net worth pretty good today. I haven't said a word about making tax code harder. You can remove a LOT of tax code with this change.

herge 10y ago

Net worth, as in property value - mortgages? Most 'middle class' people have most of their net worth in their principal residence, so you'd be adding quite a shocking tax bill to a lot of seniors on fixed incomes who own their own house. That's the problem with Mark-to-market taxing. You could start added loopholes to your "block loopholes" law, like "If you reside in the property, it's tax free", but then you hit problems like parents given their kids properties as tax shelters, and the like.

Retric 10y ago
List is as an AMT. Also, $10 million * 0.1% = 10,000$ which is a tiny tax bill at that wealth level. If your paying less than 10k and have 10 million then somewhere something broke down. IMO, you would need a much higher number. A 0.5% wealth tax AMT would = a 25% tax on a 2% ROI or 8.3% on a 6% ROI. From an economic standpoint this is actually a good idea. People with lot's of unreolised income are often stuck with unproductive assets because selling them incurs a large tax bill. With this you can sell a reasonable chunk of your assets without incurring extra tax.
guard-of-terra 10y ago
"you'd be adding quite a shocking tax bill to a lot of seniors on fixed incomes" If there are unlikely seniors on fixed incomes with houses worth more than $10M, then they may pay this tax with shares in said house. When their heirs come into possession of that house, they have to buy those shares back. 15 years of tax will be 1,5% market price.
antisthenes 10y ago
What's wrong with seniors getting hit with a slightly larger tax bill? Besides, you could alwaysexclude the primary residence from the wealth tax to lessen the burden. It would either generate additional revenue or have them move to an area with cheaper houses/properties to avoid paying it, which would make space for young professionals who otherwise would not be able to afford it. I'm also venturing to speculate that a lot of seniors are NIMBYs, facilitating the lack of affordable development and re-zoning, in which case that's another argument to get them the hell out of their expensive suburbia.

DMac87 10y ago

How about starting by taxing many people's main part of wealth, their house, at market value (i.e. no Prop 13)? Let's not let perfect get in the way of good..

st3v3r 10y ago
The problem with that is that many people bought their houses back when they were much, much cheaper. So doing that would cause many, many people to be forced from their homes only for the crime of being one of the early people in an area that later became popular. Any policy that would cause people to be forced from their homes just because should be viewed as a failure.
- jrock08 10y ago
  > Any policy that would cause people to be forced from their homes just because should be viewed as a failure. I have a really really hard time feeling bad for people who bought homes in the bay area in ~1980. They won the lottery. Their home grew 10% y/y for 30 years outpacing inflation by a significant margin. They got a 30 year tax break while their income likely outpaced inflation as well because they live in an extremely good job market. That house they bought for 100k is now worth 1.7 Million. They can sell the home, move basically anywhere else in the country, and retire on the remaining gain. Yeah, I'm having a hard time feeling too bad for them. On the other hand, the person who moved to SF in 1980 and decided to rent, I feel bad for them. Unless they found a rent controlled apartment, they've seen their rents grow 10% y/y, and if they found a rent controlled apartment they probably got evicted when the owners of the property sold it, and the new owners decided they wanted to redo the property as condos. Lets just call it what it is, rent control for rich people. Then maybe we'll talk about it sensibly and realize that it's a horribly thought out plan.
  - kamaal 10y ago
    >>I have a really really hard time feeling bad for people who bought homes in the bay area in ~1980. They won the lottery. >>On the other hand, the person who moved to SF in 1980 and decided to rent, I feel bad for them. Instead of punishing people for being successful. The latter people should ponder on their foolishness, instead of blaming other people for being more intelligent. Last time I check making good decisions about one's future is not a vice.

talmand 10y ago

Oh that's easy, as the hypothetical rich guy in the equation; I personally own nothing but the many, many companies I work for own the stuff I personally use.

guard-of-terra 10y ago
Who owns those companies? That's the one who will have to pony up.
- talmand 10y ago
  As the hypothetical rich guy; as an employee I own none of these companies, it's a tangled web of ownership of companies owning companies. But sadly none of them make any profit and have very little in terms of capital. I even have to shut down a few every year due to failure, er... I mean companies have to shut them down, but the good news is I, um... they, create new companies every year! I'm a job creator! As long as we don't consider the tax consequences of such creation.

tim333 10y ago

Taxing net worth has been done. They have it in France and a few other places. I'm not sure it's terribly popular.