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I'd be curious to see the numbers on this. I thought 99% of the wealth belonged to 1% of the population or something crazy. Are you sure taxing the middle clas

I'd be curious to see the numbers on this. I thought 99% of the wealth belonged to 1% of the population or something crazy. Are you sure taxing the middle class would bring in more than taxing the ultra richer?

pdonis 8y ago
> I thought 99% of the wealth belonged to 1% of the population or something crazy. If you're talking about taxing wealth, that's a very different thing from taxing income. I was thinking of income. The tax foundation summary of tax year 2016 [1] gives a good overview of the breakdown of income and federal income tax. The top 1 percent of earners had about 20 percent of reported income, and paid about 37 percent of income taxes received. But the income split point for the top 1 percent is only about $480K per year. Most of those people are not billionaires or even close to it. The share of income taxes paid by billionaires is much smaller. The issue with trying to tax wealth, instead of income, is that you can only tax it once and spend it once, and then it's gone. So unless you have some really obvious one-time expense that that wealth can buy you and that will benefit everyone enough to make it worthwhile to pay the political cost, it's just not feasible. [1] https://taxfoundation.org/summary-latest-federal-income-tax-data-2018-update/ https://taxfoundation.org/summary-latest-federal-income-tax-...
- fredophile 8y ago
  Why can you only tax wealth once? I pay tax on my home every year. It hasn't gone anywhere. I'll pay taxes again on it next year. How is the tax I pay on my home different than a tax on total assets?
  - pdonis 8y ago
    > Why can you only tax wealth once? Because once you tax it and spend it, it's gone. But see below. > I pay tax on my home every year. You don't pay it by selling your home and giving the government a percentage of the proceeds. You pay it out of your income. Nor does your paying property tax on your home reduce your home's value. So it's really an income tax, not a wealth tax--an income tax that is (implicitly) determined by the government's judgment of how much of your income it can extract from you based on how expensive a home you own. Paying the tax doesn't reduce your wealth. To the extent that a wealthy person could do the same--pay a so-called "wealth tax" out of current income, without having to sell any assets--it could be taken the same way; it would really be an extra income tax that very wealthy people pay, an income tax that is (implicitly) determined by the government's judgment of how much of a very wealthy person's income the government can extract based on the value of the assets they own. Paying the tax wouldn't reduce the person's wealth. But I don't think the people who are pushing a "wealth tax" are thinking of it that way. I think they are thinking of it, long term, as a way to force very wealthy people to sell assets and give the proceeds to the government, which will then redistribute it somehow. And once you reach that point, where the tax can only be paid by selling assets, then what I said applies: you can only tax it and spend it once, and then it's gone.
    - fredophile 8y ago
      > Because once you tax it and spend it, it's gone. Where did it go? Did the government burn my tax dollars in a giant bonfire? Tax money doesn't disappear. It gets spent on things like schools, hospitals, the military, fire departments, police departments, SCHIP, roads, NASA, etc. You can argue about where exactly the money should go but it all ends up back in the economy. > > I pay tax on my home every year. > You don't pay it by selling your home and giving the government a percentage of the proceeds. You pay it out of your income. Nor does your paying property tax on your home reduce your home's value. So it's really an income tax, not a wealth tax If I lose my job and run out of savings that's exactly how I pay it. Trying to call it an income tax because I have income is a poor way to reframe it. > But I don't think the people who are pushing a "wealth tax" are thinking of it that way. I think they are thinking of it, long term, as a way to force very wealthy people to sell assets and give the proceeds to the government, which will then redistribute it somehow. I don't see this as a major problem. If I own a $100 million dollar yacht and have to sell it to pay a 1% wealth tax I would still have $99 million left. If I can't find some way to make money off of that $99 million before it gets chipped away to almost nothing at 1% a year then maybe it would be better for that money to be spread around instead of concentrated somewhere it isn't being efficiently used.
      - pdonis 8y ago
        > Where did it go? It bought something, presumably. (That's if it didn't end up in the pocket of some politician or one of his cronies, or a lobbyist, or...) > You can argue about where exactly the money should go but it all ends up back in the economy. Yes, money circulates around indefinitely, but money isn't wealth. > If I can't find some way to make money off of that $99 million before it gets chipped away to almost nothing at 1% a year then maybe it would be better for that money to be spread around instead of concentrated somewhere it isn't being efficiently used. If the government actually did make more efficient use of money than individual taxpayers would, I might buy this. But very little of what the government does meets that test. Also, if you're making money by creating wealth using your $99 million starting stake (say you start a business with it, for example), and paying the wealth tax out of that, then you're doing what I described before: you're paying the tax out of income, not wealth. More generally, if people keep on creating wealth faster than the government is taxing it, then yes, there's no problem (or at least, not the problem I was trying to describe). But that's the situation I was describing when I said the tax is really an income tax, not a wealth tax. (I agree that "income tax" vs. "wealth tax" is not the best terminology to use to describe this distinction, but it's what we have.)

pdonis 8y ago

> I thought 99% of the wealth belonged to 1% of the population or something crazy. If you're talking about taxing wealth, that's a very different thing from taxing income. I was thinking of income. The tax foundation summary of tax year 2016 [1] gives a good overview of the breakdown of income and federal income tax. The top 1 percent of earners had about 20 percent of reported income, and paid about 37 percent of income taxes received. But the income split point for the top 1 percent is only about $480K per year. Most of those people are not billionaires or even close to it. The share of income taxes paid by billionaires is much smaller. The issue with trying to tax wealth, instead of income, is that you can only tax it once and spend it once, and then it's gone. So unless you have some really obvious one-time expense that that wealth can buy you and that will benefit everyone enough to make it worthwhile to pay the political cost, it's just not feasible. [1] https://taxfoundation.org/summary-latest-federal-income-tax-data-2018-update/ https://taxfoundation.org/summary-latest-federal-income-tax-...

fredophile 8y ago
Why can you only tax wealth once? I pay tax on my home every year. It hasn't gone anywhere. I'll pay taxes again on it next year. How is the tax I pay on my home different than a tax on total assets?
- pdonis 8y ago
  > Why can you only tax wealth once? Because once you tax it and spend it, it's gone. But see below. > I pay tax on my home every year. You don't pay it by selling your home and giving the government a percentage of the proceeds. You pay it out of your income. Nor does your paying property tax on your home reduce your home's value. So it's really an income tax, not a wealth tax--an income tax that is (implicitly) determined by the government's judgment of how much of your income it can extract from you based on how expensive a home you own. Paying the tax doesn't reduce your wealth. To the extent that a wealthy person could do the same--pay a so-called "wealth tax" out of current income, without having to sell any assets--it could be taken the same way; it would really be an extra income tax that very wealthy people pay, an income tax that is (implicitly) determined by the government's judgment of how much of a very wealthy person's income the government can extract based on the value of the assets they own. Paying the tax wouldn't reduce the person's wealth. But I don't think the people who are pushing a "wealth tax" are thinking of it that way. I think they are thinking of it, long term, as a way to force very wealthy people to sell assets and give the proceeds to the government, which will then redistribute it somehow. And once you reach that point, where the tax can only be paid by selling assets, then what I said applies: you can only tax it and spend it once, and then it's gone.
  - fredophile 8y ago
    > Because once you tax it and spend it, it's gone. Where did it go? Did the government burn my tax dollars in a giant bonfire? Tax money doesn't disappear. It gets spent on things like schools, hospitals, the military, fire departments, police departments, SCHIP, roads, NASA, etc. You can argue about where exactly the money should go but it all ends up back in the economy. > > I pay tax on my home every year. > You don't pay it by selling your home and giving the government a percentage of the proceeds. You pay it out of your income. Nor does your paying property tax on your home reduce your home's value. So it's really an income tax, not a wealth tax If I lose my job and run out of savings that's exactly how I pay it. Trying to call it an income tax because I have income is a poor way to reframe it. > But I don't think the people who are pushing a "wealth tax" are thinking of it that way. I think they are thinking of it, long term, as a way to force very wealthy people to sell assets and give the proceeds to the government, which will then redistribute it somehow. I don't see this as a major problem. If I own a $100 million dollar yacht and have to sell it to pay a 1% wealth tax I would still have $99 million left. If I can't find some way to make money off of that $99 million before it gets chipped away to almost nothing at 1% a year then maybe it would be better for that money to be spread around instead of concentrated somewhere it isn't being efficiently used.
    - pdonis 8y ago
      > Where did it go? It bought something, presumably. (That's if it didn't end up in the pocket of some politician or one of his cronies, or a lobbyist, or...) > You can argue about where exactly the money should go but it all ends up back in the economy. Yes, money circulates around indefinitely, but money isn't wealth. > If I can't find some way to make money off of that $99 million before it gets chipped away to almost nothing at 1% a year then maybe it would be better for that money to be spread around instead of concentrated somewhere it isn't being efficiently used. If the government actually did make more efficient use of money than individual taxpayers would, I might buy this. But very little of what the government does meets that test. Also, if you're making money by creating wealth using your $99 million starting stake (say you start a business with it, for example), and paying the wealth tax out of that, then you're doing what I described before: you're paying the tax out of income, not wealth. More generally, if people keep on creating wealth faster than the government is taxing it, then yes, there's no problem (or at least, not the problem I was trying to describe). But that's the situation I was describing when I said the tax is really an income tax, not a wealth tax. (I agree that "income tax" vs. "wealth tax" is not the best terminology to use to describe this distinction, but it's what we have.)