3 ms·

Why does a tax have to be proportional to "real, actual damages"?

zozbot234 7y ago
I'm not saying that all taxes have to be like this. There are other possible arguments for taxing assets, despite the fact that, prima facie, any tax on assets is double taxation and quite highly distortionary of the economy (far more than, e.g. taxes on pure rents, consumption taxes or taxes on labor income). But our existing taxes tend to account for these arguments reasonably well. So if you want to propose some extra tax on wealth, it had better be based on something tangible. And it just doesn't seem to me that this is true of what's being proposed wrt. the U.S.
- Retric 7y ago
  First, Art and collectibles are also given preferential tax treatment and have no kinds of double taxation. Anyway, unrealized capital gains are untaxed as they compound, which might be ok except inheritance and gifts under 10m for couples are also untaxed creating a giant loophole allowing for very low lifetime tax rates. It’s the same issues as companies keeping giant piles of cash offshore rather than issuing dividends. Tax loopholes create economic issues which a low AMT actually helps smooth out without creating excessive burdens. Another solution is to tax all capital gains and have an investment tax break of some kind, which allows earned income to be invested without excessive taxation relative to capital gains. PS: Couples being assumed as people have 2 parents.
  - zozbot234 7y ago
    They're going to be taxed when the gain is realized. An asset is a durable good anyway, pretty much by definition so how can it matter when the tax is levied?!
    - Retric 7y ago
      Not if it’s inherited. Buy stock at 10$ have it raise to 10,000$ and after death your children can sell it and keep the full 10,000$. Assuming your estate is worth only worth a few million. Or if they maintain ownership and sell it in 10 years when it’s worth 20,000$ they are paying 15% of 10k gains which is 7.5% of the total gains from your purchase. PS: For the ultra wealthily there are other games to be played. ‘No forgiven debt is taxable if it was discharged in any type of bankruptcy.’ Play the game correctly and a loss can be deducted from both your and your parents future incomes. While gains are taxed normally.

I'm not saying that all taxes have to be like this. There are other possible arguments for taxing assets, despite the fact that, prima facie, any tax on assets is double taxation and quite highly distortionary of the economy (far more than, e.g. taxes on pure rents, consumption taxes or taxes on labor income). But our existing taxes tend to account for these arguments reasonably well. So if you want to propose some extra tax on wealth, it had better be based on something tangible. And it just doesn't seem to me that this is true of what's being proposed wrt. the U.S.

Retric 7y ago
First, Art and collectibles are also given preferential tax treatment and have no kinds of double taxation. Anyway, unrealized capital gains are untaxed as they compound, which might be ok except inheritance and gifts under 10m for couples are also untaxed creating a giant loophole allowing for very low lifetime tax rates. It’s the same issues as companies keeping giant piles of cash offshore rather than issuing dividends. Tax loopholes create economic issues which a low AMT actually helps smooth out without creating excessive burdens. Another solution is to tax all capital gains and have an investment tax break of some kind, which allows earned income to be invested without excessive taxation relative to capital gains. PS: Couples being assumed as people have 2 parents.
- zozbot234 7y ago
  They're going to be taxed when the gain is realized. An asset is a durable good anyway, pretty much by definition so how can it matter when the tax is levied?!
  - Retric 7y ago
    Not if it’s inherited. Buy stock at 10$ have it raise to 10,000$ and after death your children can sell it and keep the full 10,000$. Assuming your estate is worth only worth a few million. Or if they maintain ownership and sell it in 10 years when it’s worth 20,000$ they are paying 15% of 10k gains which is 7.5% of the total gains from your purchase. PS: For the ultra wealthily there are other games to be played. ‘No forgiven debt is taxable if it was discharged in any type of bankruptcy.’ Play the game correctly and a loss can be deducted from both your and your parents future incomes. While gains are taxed normally.