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#define financially independent That phrase means different things to different people. In some parts of the world, $50k could consider you to be financially i

#define financially independent That phrase means different things to different people. In some parts of the world, $50k could consider you to be financially independent. $500k in others, and in some parts, you'd need $5m - $50m. What if I told you it cost $5/day to rent a luxury hotel room with cleaning, full board, and high speed broadband provided as standard? What if I told you it cost $1500/month for a small studio apartment with no furnishings or anything else? Both are true, both are real, both require different amounts of money in order to achieve financial independence. I realise now that I haven't actually answered your question: > What does your world look like where you'd be too taxed to bother wanting to be financially independent? Rewriting that to be "What does your world look like where you'd be too taxed to bother generating more wealth?" There comes a point of diminishing returns. If you work a 40 hour week already and make a decent living at 40-50%, and now get told that anything above that will get taxed at 75%, unless you're going to somehow generate more than double, you're going to spend that time doing more productive things (like spending it with your family). Arguably, that's a net-positive for society as a whole, but may be a net-negative for the economy/GDP of the country you reside in.

majormajor 9y ago
There's a header of "American" on this very post, and it's specifically talking about the US, so I'm starting there. The biggest potential cost of someone in the US, with employer-tied healthcare, seems like medical. You could hit the unlucky jackpot and have a seven-figure+ medical bill over the course of a few years or life. So let's set "able to handle that for yourself and your family" as the baseline for being considered independent, since that's probably bigger risk than, say, "owning but then losing a multimillion-dollar-home to a flood" or somesuch. But I also don't think this term is generally understood as poorly as you suggest. -------- Responding to context complaints aside, you're still talking income tax, not wealth tax. My question was what this hypothetical negative-use wealth tax looks like, since the further-upthread post had suggested taxing wealth instead of using income as one of (several) proxies. But also, my hours have not increased with my compensation in the manner you suggest. I know that every additional dollar loses 40% or whatever of it, I still would rather have it than not have it. 5%, probably wouldn't care, but would I still want more autonomy and responsibility at work for the sake of more feeling in control? Maybe. Maybe not. There are both financial and non-financial sides there, but if income was the sole basis for choosing our roles, we'd be in a very different-looking world. So that's why I'm skeptical that a wealth tax would make me give up having big dreams—the personal safety net and toys are still incredibly appealing.
- oarsinsync 9y ago
  All fair points, but even within the US, $5m goes as far in some states as $50m does in some cities. Besides that, one person's "personal safety net and toys" is another person's "not enough", is another person's "greed". Meanwhile, you're getting taxed on the estate you're trying to build as you build it. Twice. Every year. As someone who's currently attempting to build his own personal empire, I'm incredibly glad I don't have a wealth tax to contend with. It's hard enough as it is, without knowing that if I start to draw close, it'll get harder and harder as I go. I might not have started trying if it didn't seem possible in the first place. Then again, I might have done it anyway. Where's a quantum theorist when you need one?
  - majormajor 9y ago
    Good point, I was making an assumption that this was a wholesale replacement scenario for income and other taxes. My only other quibble is that I haven't seen healthcare costs or insurance premiums scale to that 10x factor like housing prices do rural-vs-urban, otherwise I'd personally be perfectly happy with moving and retiring early. Get the right cancer or nasty chronic condition and you're gonna be out some serious bucks.
  - jacquesm 9y ago
    A 1% wealthtax is nothing to be scared of (I'm living with it), if you can't make 1% on your capital you are doing something wrong.
    - sokoloff 9y ago
      It seems it would have the effect of magnifying down markets. (Down 30% in the market? Pay us another 1.2%, please, selling shares if you must; we don't care.) Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)
      - jacquesm 9y ago
geofft 9y ago
> If you work a 40 hour week already and make a decent living at 40-50%, and now get told that anything above that will get taxed at 75%, unless you're going to somehow generate more than double, you're going to spend that time doing more productive things (like spending it with your family). Hold up - 1. Why is this about working more hours, instead of working harder / more effectively? There are 168 hours in a week; even if you don't sleep, you cannot maximize your income beyond about 4x just by working more. I am currently making about 15x the lowest hourly rate I ever worked for, and I'm still fairly early in my career and feel like there's a lot of room for my salary to increase as I become more skilled. 2. I'm reading the discussion was about a tax on wealth, not a tax on income (dwealth/dt). If you're making a decent living and want to make more money so you can spend it on things that are not investments (consumer goods like video games, services like vacation travel/hotels, charity, raising more children, sending them to college), a tax on wealth will not affect you, because your wealth stays right where it is. And doing all that is net-positive for the economy. 'majormajor is clearly talking about wealth in the sense of static assets, not change in assets over time: I'm worried about having a single medical emergency, not having one every year. Make enough for your (static) safety net, then stop making more money.
- sheepmullet 9y ago
  > Why is this about working more hours, instead of working harder / more effectively? Because they are tightly linked for most people. I've managed to increase my income ~5x from what it was when I started but to do that I have had to put in 2 hours/day of side study.
  - geofft 9y ago
    Sure, and if I insisted on working exactly 40 hours I probably would not have gotten the raises or opportunities I got. But I am personally nowhere close to the amount of income we're talking about here, let alone wealth, and I've sort of maxed out my ability to be productive. Do we think that at the margin that a wealth tax would kick in - which is specifically not most people - the number of hours worked is relevant?
sokoloff 9y ago
Out of curiosity, where did you have in mind for the $5 luxury hotel, room, board, and high-speed internet? That sounds like a place many of us might like to put on the docket for later.
fragmede 9y ago
Btw, $1,500 for a studio is about half the going rate in SF.
BatFastard 9y ago
Where can I get a luxury hotel room for 5 USD a day?

majormajor 9y ago

There's a header of "American" on this very post, and it's specifically talking about the US, so I'm starting there. The biggest potential cost of someone in the US, with employer-tied healthcare, seems like medical. You could hit the unlucky jackpot and have a seven-figure+ medical bill over the course of a few years or life. So let's set "able to handle that for yourself and your family" as the baseline for being considered independent, since that's probably bigger risk than, say, "owning but then losing a multimillion-dollar-home to a flood" or somesuch. But I also don't think this term is generally understood as poorly as you suggest. -------- Responding to context complaints aside, you're still talking income tax, not wealth tax. My question was what this hypothetical negative-use wealth tax looks like, since the further-upthread post had suggested taxing wealth instead of using income as one of (several) proxies. But also, my hours have not increased with my compensation in the manner you suggest. I know that every additional dollar loses 40% or whatever of it, I still would rather have it than not have it. 5%, probably wouldn't care, but would I still want more autonomy and responsibility at work for the sake of more feeling in control? Maybe. Maybe not. There are both financial and non-financial sides there, but if income was the sole basis for choosing our roles, we'd be in a very different-looking world. So that's why I'm skeptical that a wealth tax would make me give up having big dreams—the personal safety net and toys are still incredibly appealing.

oarsinsync 9y ago
All fair points, but even within the US, $5m goes as far in some states as $50m does in some cities. Besides that, one person's "personal safety net and toys" is another person's "not enough", is another person's "greed". Meanwhile, you're getting taxed on the estate you're trying to build as you build it. Twice. Every year. As someone who's currently attempting to build his own personal empire, I'm incredibly glad I don't have a wealth tax to contend with. It's hard enough as it is, without knowing that if I start to draw close, it'll get harder and harder as I go. I might not have started trying if it didn't seem possible in the first place. Then again, I might have done it anyway. Where's a quantum theorist when you need one?
- majormajor 9y ago
  Good point, I was making an assumption that this was a wholesale replacement scenario for income and other taxes. My only other quibble is that I haven't seen healthcare costs or insurance premiums scale to that 10x factor like housing prices do rural-vs-urban, otherwise I'd personally be perfectly happy with moving and retiring early. Get the right cancer or nasty chronic condition and you're gonna be out some serious bucks.
- jacquesm 9y ago
  A 1% wealthtax is nothing to be scared of (I'm living with it), if you can't make 1% on your capital you are doing something wrong.
  - sokoloff 9y ago
    It seems it would have the effect of magnifying down markets. (Down 30% in the market? Pay us another 1.2%, please, selling shares if you must; we don't care.) Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)
    - jacquesm 9y ago

geofft 9y ago

> If you work a 40 hour week already and make a decent living at 40-50%, and now get told that anything above that will get taxed at 75%, unless you're going to somehow generate more than double, you're going to spend that time doing more productive things (like spending it with your family). Hold up - 1. Why is this about working more hours, instead of working harder / more effectively? There are 168 hours in a week; even if you don't sleep, you cannot maximize your income beyond about 4x just by working more. I am currently making about 15x the lowest hourly rate I ever worked for, and I'm still fairly early in my career and feel like there's a lot of room for my salary to increase as I become more skilled. 2. I'm reading the discussion was about a tax on wealth, not a tax on income (dwealth/dt). If you're making a decent living and want to make more money so you can spend it on things that are not investments (consumer goods like video games, services like vacation travel/hotels, charity, raising more children, sending them to college), a tax on wealth will not affect you, because your wealth stays right where it is. And doing all that is net-positive for the economy. 'majormajor is clearly talking about wealth in the sense of static assets, not change in assets over time: I'm worried about having a single medical emergency, not having one every year. Make enough for your (static) safety net, then stop making more money.

sheepmullet 9y ago
> Why is this about working more hours, instead of working harder / more effectively? Because they are tightly linked for most people. I've managed to increase my income ~5x from what it was when I started but to do that I have had to put in 2 hours/day of side study.
- geofft 9y ago
  Sure, and if I insisted on working exactly 40 hours I probably would not have gotten the raises or opportunities I got. But I am personally nowhere close to the amount of income we're talking about here, let alone wealth, and I've sort of maxed out my ability to be productive. Do we think that at the margin that a wealth tax would kick in - which is specifically not most people - the number of hours worked is relevant?

sokoloff 9y ago

Out of curiosity, where did you have in mind for the $5 luxury hotel, room, board, and high-speed internet? That sounds like a place many of us might like to put on the docket for later.

fragmede 9y ago

Btw, $1,500 for a studio is about half the going rate in SF.

BatFastard 9y ago

Where can I get a luxury hotel room for 5 USD a day?