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https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... >Currently, the richest 1%

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... >Currently, the richest 1% hold about 38% of all privately held wealth in the United States. while the bottom 90% held 73% of all debt. According to The New York Times, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent". Your stats don't sound so crazy when you put it in context. Please feel free to peruse the economic history of states where the rich eventually dodged taxes and left the crushing burden to the middle and poor: ancient Rome, modern Greece, etc.

bpodgursky 10y ago
Very few people would consider taxation based on "wealth" to be a fair system. Most people accept income taxes fair enough, but a taxation system based on wealth feels like (and is) simple confiscation. You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Even better, if you subtract out debt (as you suggest), this gives me an incentive to spend my money, rake up debt, and pay nothing -- wealth is now a liability, didn't you hear?
- modeless 10y ago
  On the contrary, taxation based on wealth would be much fairer than taxation based on income. Unfortunately a wealth tax is pretty much impossible to implement. The closest thing we have is property taxes. > You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Yes, that is fair! How about this scenario instead: I hold $100,000, but suddenly make $300,000 this year because I sold my startup. Trump holds $1,000,000,000, spends $1,000,000, and loses money on a stupid investment so his net income is negative. I pay $120,000 tax, over a quarter of my net worth, while he pays nothing. Is that fair?
  - dpark 10y ago
    You think it's fair that the government should punish the frugal for not spending every dime they make? If you and I earn the same but I spend all of my money on alcohol and pot, while you set aside to pay for your kids' college, how is it fair that you pay more tax?
    - orbitingpluto 10y ago
      There is an argument wherein you could say that those who merely sit on their wealth are causing economic stagnation. Taxing wealth becomes an incentive for the wealthy to have their money make more wealth, instead of just sitting on a mountain of gold coins and interests rates could again rise.
      - dpark 10y ago
        You could make that argument and I might even listen. It's in no sense fair even if it makes economic sense though.
  - pcardh0 10y ago
    Your retire with 100K, that year you lose 20K in the stock market, you pay no taxes. Next year you make 20K in the stock market. Is it fair for that entire 20K to be taxed?
    - dogma1138 10y ago
      No, and because of that you don't pay next year since you are allowed to carry loss forward. :)
      - twblalock 10y ago
        Only $3000 per year can be carried forward.
        dogma1138 10y ago
- lobster_johnson 10y ago
  Wealth tax exists in other countries, though. In Norway, there's a (controversial!) wealth tax of 0.7% for amounts exceeding $170k. This tax considers liquid assets, property assets and other personal property such as cars. It is, however, controversial; it means your income is subject to being taxed twice. As far as I know, the US only has property tax, and it's mostly taxed on real estate.
  - dogma1138 10y ago
    There is already tax on wealth in every country it's called capital gains tax. It's taxed at any time when the gain is actually realized e.g when you sell something that has increased in value. There is no point of taxing wealth at an arbitrary time and this is actually destructive to the middle class and not the wealthiest ones.
- danieltillett 10y ago
  The solution is to tax assets directly (i.e. the asset owes the tax) in combination with large consumption/VAT/GST tax and not tax income at all. These two taxes would be very difficult to avoid and not bias against investment verses consumption (provided you got the mix right).
  - dogma1138 10y ago
    These would affect lowest classes more than the rich and would kill social mobility. Look at the old money problem in Europe.
    - danieltillett 10y ago
      Why would it affect the lowest classes more? You can apply any per person payment you like to change the effective rate of any consumption tax. For example you could give everyone a $10,000 cash payment/ tax credit / call-it-what-you-like every year. This would fix any regressive consequences of a large consumption tax. As for taxing assets directly, it is impossible to hide most of them (land and buildings are very hard to hide). Even things like shares and bonds are near impossible to hide. About the only thing that could be hidden are things like diamonds, but these are such a tiny amount of all assets that it would not be important. Lets get away from taxing productive activities (i.e. income) and start taxing consumption and hoarding.
      - dogma1138 10y ago
        You can't hide anything as we speak, when you sell your house you pay capital gains taxes on it if it increased in value. Same goes for any other item. Taxing "wealth" would means that the wealthy would keep being wealthy but the poor can never gain any wealth, this is what is effectively has been going in Europe since WW2 with the exception that there is a subclass of the "wealthy poor" in Europe, those who have inherited property and titles but effectively have no cash to uphold them. Under this system you would penalize people who have savings, people who invest, and more importantly people who need to consume "more" such as people who are having kids because they need to buy a bigger house or a bigger car. Under your system you also encourage grey and black market trading, and secondary economies that bypass the taxation system. Taxing income is fair because it taxes what you get, taxing wealth is abysmal because it taxes what you have. Wealth taxation would mean that any financial crisis where people lose their job would be 1000 times worse, it means that getting sick or wanting to leave work to raise children or to help parents would be impossible, it pushes people to effectively be slaves because you don't tax what they actively receive but have a regressive exponential tax on what they've accumulated in their entire lifetime effectively you tell people do not save, do not buy something which is too big, do not retire and work all your life otherwise you won't be able to afford what you already own. You can't strip people off property they have already own, I can't even understand how would people come to think this system of taxation is reasonable, to the point of which I am beginning to question where people who post on HN live and how do they make their money. We already live in a society where you effectively taxed for well over 50% of your income, where to buy a house you have to be endured to a bank for decades and you want to make this worse?
twblalock 10y ago
Your stats about wealth inequality are fine, but there is another stat that needs to be considered alongside them: in the US, the vast majority of wealth was not inherited. In fact, a smaller percentage of wealthy individuals in the US inherited their wealth than in most other countries. This is from https://www.bloomberg.com/view/articles/2016-10-06/the-rich-are-also-different-from-one-another https://www.bloomberg.com/view/articles/2016-10-06/the-rich-..., based on this study: https://www.psychologytoday.com/sites/default/files/WaiLincoln_RightTailofWealth.pdf https://www.psychologytoday.com/sites/default/files/WaiLinco... However, this is all moot, because taxation is based on income, not wealth. The only way the US government taxes wealth in and of itself is the estate tax, which affects a pretty small percentage of estates. It would be more relevant to focus on income inequality, but even then, that's missing my point. It's true that wealth and income are very unequal in the US, but it's also true that the people who benefit from that inequality pay more than half of the taxes, and many people pay none at all. How much more should the rich pay before they reach their "fair share?"
- afterburner 10y ago
  The rich currently pay effective income taxes at a lower rate than the middle class, thanks to their close association with corporations and much of their gains being stock related. Taxes on the rich are just recovering from all-time lows in the Bush years. So stop acting as if the rich are being bled dry or pushed to a limit. They avoid taxes using offshore strategies because they can, not because they're in dire straights. And they are succeeding in paying lower rates than anyone else. Meanwhile, one of the major parties of the country wants to cut estate and upper end income taxes even more, and raise them on the middle and poor. The fight isn't happening at the rich's doorsteps, it's happening at the doorsteps of the middle and poor, pushed there by the rich.
  - deleted 10y ago
    [deleted]
  - twblalock 10y ago
    > So stop acting as if the rich are being bled dry or pushed to a limit. I never said they were being bled dry. I said they already pay most of the taxes, and it seems unjustifiable to ask them for even more, while at the same time demonizing them for not paying their "fair share" -- as if paying more than half of the taxes isn't already a major contribution. Their ability to pay is not relevant to my argument.
DominikR 10y ago
And why should it be a problem if there is wealth inequality? When you have a company and make a lot of money you don't steal from anyone. All money that you earn is coming from customers that freely give up their hard earned money in exchange for whatever you are selling. The only one who is stealing your money is the government, actually you are robbed because they will use force if you don't hand over your property. Also why should rich people pay more taxes than poor people? What is the moral reasoning behind that? As I see it you pay for government services and to me it is immoral that one has to overpay 100x for a service while someone else pays a fraction of that. It's as if you walk into a coffee shop and one guy pays $1 for a cup of coffee while another rich person is forced to pay $100 for the same cup of coffee. No wonder that rich people move their money somewhere else. If a majority survives by leeching off a productive minority then eventually the system will fail and people will live in abject misery and poverty.
- twblalock 10y ago
  > If a majority survives by leeching off a productive minority then eventually the system will fail and people will live in abject misery and poverty. If that was true, it would have happened a long time ago.
  - DominikR 10y ago
    Oh well, we see debt in the West rising exponentially while more and more businesses leave the West and people are getting poorer and poorer. If that's not a clear vote from the productive elements of society on how well taxation is working for them then I don't know what is.

bpodgursky 10y ago

Very few people would consider taxation based on "wealth" to be a fair system. Most people accept income taxes fair enough, but a taxation system based on wealth feels like (and is) simple confiscation. You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Even better, if you subtract out debt (as you suggest), this gives me an incentive to spend my money, rake up debt, and pay nothing -- wealth is now a liability, didn't you hear?

modeless 10y ago
On the contrary, taxation based on wealth would be much fairer than taxation based on income. Unfortunately a wealth tax is pretty much impossible to implement. The closest thing we have is property taxes. > You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Yes, that is fair! How about this scenario instead: I hold $100,000, but suddenly make $300,000 this year because I sold my startup. Trump holds $1,000,000,000, spends $1,000,000, and loses money on a stupid investment so his net income is negative. I pay $120,000 tax, over a quarter of my net worth, while he pays nothing. Is that fair?
- dpark 10y ago
  You think it's fair that the government should punish the frugal for not spending every dime they make? If you and I earn the same but I spend all of my money on alcohol and pot, while you set aside to pay for your kids' college, how is it fair that you pay more tax?
  - orbitingpluto 10y ago
    There is an argument wherein you could say that those who merely sit on their wealth are causing economic stagnation. Taxing wealth becomes an incentive for the wealthy to have their money make more wealth, instead of just sitting on a mountain of gold coins and interests rates could again rise.
    - dpark 10y ago
      You could make that argument and I might even listen. It's in no sense fair even if it makes economic sense though.
- pcardh0 10y ago
  Your retire with 100K, that year you lose 20K in the stock market, you pay no taxes. Next year you make 20K in the stock market. Is it fair for that entire 20K to be taxed?
  - dogma1138 10y ago
    No, and because of that you don't pay next year since you are allowed to carry loss forward. :)
    - twblalock 10y ago
      Only $3000 per year can be carried forward.
      - dogma1138 10y ago
lobster_johnson 10y ago
Wealth tax exists in other countries, though. In Norway, there's a (controversial!) wealth tax of 0.7% for amounts exceeding $170k. This tax considers liquid assets, property assets and other personal property such as cars. It is, however, controversial; it means your income is subject to being taxed twice. As far as I know, the US only has property tax, and it's mostly taxed on real estate.
- dogma1138 10y ago
  There is already tax on wealth in every country it's called capital gains tax. It's taxed at any time when the gain is actually realized e.g when you sell something that has increased in value. There is no point of taxing wealth at an arbitrary time and this is actually destructive to the middle class and not the wealthiest ones.
danieltillett 10y ago
The solution is to tax assets directly (i.e. the asset owes the tax) in combination with large consumption/VAT/GST tax and not tax income at all. These two taxes would be very difficult to avoid and not bias against investment verses consumption (provided you got the mix right).
- dogma1138 10y ago
  These would affect lowest classes more than the rich and would kill social mobility. Look at the old money problem in Europe.
  - danieltillett 10y ago
    Why would it affect the lowest classes more? You can apply any per person payment you like to change the effective rate of any consumption tax. For example you could give everyone a $10,000 cash payment/ tax credit / call-it-what-you-like every year. This would fix any regressive consequences of a large consumption tax. As for taxing assets directly, it is impossible to hide most of them (land and buildings are very hard to hide). Even things like shares and bonds are near impossible to hide. About the only thing that could be hidden are things like diamonds, but these are such a tiny amount of all assets that it would not be important. Lets get away from taxing productive activities (i.e. income) and start taxing consumption and hoarding.
    - dogma1138 10y ago
      You can't hide anything as we speak, when you sell your house you pay capital gains taxes on it if it increased in value. Same goes for any other item. Taxing "wealth" would means that the wealthy would keep being wealthy but the poor can never gain any wealth, this is what is effectively has been going in Europe since WW2 with the exception that there is a subclass of the "wealthy poor" in Europe, those who have inherited property and titles but effectively have no cash to uphold them. Under this system you would penalize people who have savings, people who invest, and more importantly people who need to consume "more" such as people who are having kids because they need to buy a bigger house or a bigger car. Under your system you also encourage grey and black market trading, and secondary economies that bypass the taxation system. Taxing income is fair because it taxes what you get, taxing wealth is abysmal because it taxes what you have. Wealth taxation would mean that any financial crisis where people lose their job would be 1000 times worse, it means that getting sick or wanting to leave work to raise children or to help parents would be impossible, it pushes people to effectively be slaves because you don't tax what they actively receive but have a regressive exponential tax on what they've accumulated in their entire lifetime effectively you tell people do not save, do not buy something which is too big, do not retire and work all your life otherwise you won't be able to afford what you already own. You can't strip people off property they have already own, I can't even understand how would people come to think this system of taxation is reasonable, to the point of which I am beginning to question where people who post on HN live and how do they make their money. We already live in a society where you effectively taxed for well over 50% of your income, where to buy a house you have to be endured to a bank for decades and you want to make this worse?

twblalock 10y ago

Your stats about wealth inequality are fine, but there is another stat that needs to be considered alongside them: in the US, the vast majority of wealth was not inherited. In fact, a smaller percentage of wealthy individuals in the US inherited their wealth than in most other countries. This is from https://www.bloomberg.com/view/articles/2016-10-06/the-rich-are-also-different-from-one-another https://www.bloomberg.com/view/articles/2016-10-06/the-rich-..., based on this study: https://www.psychologytoday.com/sites/default/files/WaiLincoln_RightTailofWealth.pdf https://www.psychologytoday.com/sites/default/files/WaiLinco... However, this is all moot, because taxation is based on income, not wealth. The only way the US government taxes wealth in and of itself is the estate tax, which affects a pretty small percentage of estates. It would be more relevant to focus on income inequality, but even then, that's missing my point. It's true that wealth and income are very unequal in the US, but it's also true that the people who benefit from that inequality pay more than half of the taxes, and many people pay none at all. How much more should the rich pay before they reach their "fair share?"

afterburner 10y ago
The rich currently pay effective income taxes at a lower rate than the middle class, thanks to their close association with corporations and much of their gains being stock related. Taxes on the rich are just recovering from all-time lows in the Bush years. So stop acting as if the rich are being bled dry or pushed to a limit. They avoid taxes using offshore strategies because they can, not because they're in dire straights. And they are succeeding in paying lower rates than anyone else. Meanwhile, one of the major parties of the country wants to cut estate and upper end income taxes even more, and raise them on the middle and poor. The fight isn't happening at the rich's doorsteps, it's happening at the doorsteps of the middle and poor, pushed there by the rich.
- deleted 10y ago
  [deleted]
- twblalock 10y ago
  > So stop acting as if the rich are being bled dry or pushed to a limit. I never said they were being bled dry. I said they already pay most of the taxes, and it seems unjustifiable to ask them for even more, while at the same time demonizing them for not paying their "fair share" -- as if paying more than half of the taxes isn't already a major contribution. Their ability to pay is not relevant to my argument.

DominikR 10y ago

And why should it be a problem if there is wealth inequality? When you have a company and make a lot of money you don't steal from anyone. All money that you earn is coming from customers that freely give up their hard earned money in exchange for whatever you are selling. The only one who is stealing your money is the government, actually you are robbed because they will use force if you don't hand over your property. Also why should rich people pay more taxes than poor people? What is the moral reasoning behind that? As I see it you pay for government services and to me it is immoral that one has to overpay 100x for a service while someone else pays a fraction of that. It's as if you walk into a coffee shop and one guy pays $1 for a cup of coffee while another rich person is forced to pay $100 for the same cup of coffee. No wonder that rich people move their money somewhere else. If a majority survives by leeching off a productive minority then eventually the system will fail and people will live in abject misery and poverty.

twblalock 10y ago
> If a majority survives by leeching off a productive minority then eventually the system will fail and people will live in abject misery and poverty. If that was true, it would have happened a long time ago.
- DominikR 10y ago
  Oh well, we see debt in the West rising exponentially while more and more businesses leave the West and people are getting poorer and poorer. If that's not a clear vote from the productive elements of society on how well taxation is working for them then I don't know what is.