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There are definitely problems with most wealth tax proposals, but I think the author understates the generational differences in opportunity that emerge from ma

There are definitely problems with most wealth tax proposals, but I think the author understates the generational differences in opportunity that emerge from massive wealth inequality. As I stated in another thread, perhaps the best solution would be to combine the two for a wealth-based income tax. If you're already worth 20M, should you be paying a higher rate on your 500k in interest than if you just sold your first company for 500k and previously had nothing? I think that's a reasonable way to address income inequality in the long run without forcing people to liquidate assets, especially those like Elon Musk who have most of their wealth tied into companies they actively manage or people whose entire net worth is tied up in historical family properties. The current system is broken, but mostly because the income/capital gains tax/AMT need to be graduated on a far different system than today. Right now, making 510k places a single person in the top federal tax bracket, while there are people making 10,000 times that some years. If there isn't a high bracket that is rarely achieved in practice (10B+/year for example), then the brackets are probably broken. Right now we have a sharp cliff where it is very difficult to become a millionaire, but once you get a few million it becomes far easier to multiply wealth.

vearwhershuh 7y ago
Until we address the monetary system I don't see how much else matters in restraining the elites. Generational wealth will just move even more so into non-taxable things like art, favors, interlocking directorships, foundations and so forth. I'd like to see a georgist tax regime[1] and monetary expansion managed via a citizens dividend. But the current monetary system will only be pried from the cold-dead hands of our elites, so I'm not optimistic. [1] - https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
- lend000 7y ago
  Georgism is an interesting approach to what could be handled by externality taxes in capitalism, but it seems like it would have challenges attaining accurate price discovery of naturally derived resources. Regardless, I think the obvious flaws in our current system make a very big difference and should be addressed, rather than holding out for a utopian pipe dream.
MuffinFlavored 7y ago
Say I own a business that has $250k in assets but does $10m/yr in revenue. Does that add to my wealth? How do you value owning a business?
- lend000 7y ago
  Anything based on wealth will have the challenging task of valuing assets, which is why the cutoff for where current wealth becomes a factor should be pretty high, so you only have to look at areas generating significant economic activity. One solution could be to limit wealth measurement to liquid assets and real estate -- any real world implementation will only be a heuristic. Better to have false negatives than false positives. I still maintain the easiest solution is to fix and improve graduated income brackets. They are so ridiculously broken and most likely the main driver of increased wealth inequality in the US over the last few decades, and yet somehow are not the focus of the issue. We also already have the infrastructure to measure economic income activity -- it's just tweaking rates and thresholds.
  - MuffinFlavored 7y ago
    Can you expand on why you think income brackets are broken?

vearwhershuh 7y ago

Until we address the monetary system I don't see how much else matters in restraining the elites. Generational wealth will just move even more so into non-taxable things like art, favors, interlocking directorships, foundations and so forth. I'd like to see a georgist tax regime[1] and monetary expansion managed via a citizens dividend. But the current monetary system will only be pried from the cold-dead hands of our elites, so I'm not optimistic. [1] - https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism

lend000 7y ago
Georgism is an interesting approach to what could be handled by externality taxes in capitalism, but it seems like it would have challenges attaining accurate price discovery of naturally derived resources. Regardless, I think the obvious flaws in our current system make a very big difference and should be addressed, rather than holding out for a utopian pipe dream.

MuffinFlavored 7y ago

Say I own a business that has $250k in assets but does $10m/yr in revenue. Does that add to my wealth? How do you value owning a business?

lend000 7y ago
Anything based on wealth will have the challenging task of valuing assets, which is why the cutoff for where current wealth becomes a factor should be pretty high, so you only have to look at areas generating significant economic activity. One solution could be to limit wealth measurement to liquid assets and real estate -- any real world implementation will only be a heuristic. Better to have false negatives than false positives. I still maintain the easiest solution is to fix and improve graduated income brackets. They are so ridiculously broken and most likely the main driver of increased wealth inequality in the US over the last few decades, and yet somehow are not the focus of the issue. We also already have the infrastructure to measure economic income activity -- it's just tweaking rates and thresholds.
- MuffinFlavored 7y ago
  Can you expand on why you think income brackets are broken?