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I'm not sure european examples are a great comparison. First, most european wealth taxes (including recently defunct ones) have much lower floors than US propo

• sam_lowry_ 6y ago
  Gerard Depardieu and Bernard Arnault returned their assets to France, and their flight was not without scandals. Their reputation shattered.
  • dalbasal 6y ago
    Granted. I was just using the bruhaha to demonstrate a point. A millionaire tax and a billionaire tax are totally different in practice, both operationally and socially.
    • sam_lowry_ 6y ago
      Depardieu is a millionaire and Arnault is a billionaire.
  • refurb 6y ago
    Did they return their assets before or after the tax was rescinded?
• cycomanic 6y ago
  The question if billionaires are bad for society is pretty much the same question as asking if the aristocracy was bad for previous societies. The existence of billionaires clearly undermines the core principles of democracy which is that all people have essentially the same political power. The existence of many laws which clearly aim to benefit billionaires only is enough evidence that this power balance does not exist when there are billionaires. Essentially strong wealth imbalance leads to unstable societies. I find it ironic that the US which was largely founded by people who left their home because of entrenched economics and limited opportunities and who used to have some of the highest taxes for the top brackets and strong eversion to the development of a new aristocracy have after Reagan developed into a nation of defenders log the superrich.
  • eanzenberg 6y ago
    More precisely, attacking billionaires is attacking jobs. So you should ask, are jobs bad for society? Curbing billionaires will only curb job growth, wage growth and realized economic growth. It wont raise much revenue
    • projektfu 6y ago
      How is it more precise to say something the commenter didn't say and, probably, wouldn't say?
      • dalbasal 6y ago
        don't feed
        • komali2 6y ago
          Is that a troll? I assumed they were just a fervent capitalist apologist.
          • VRay 6y ago
            They're both trolls, man. This is looking like a Reddit thread "BILLIONAIRES BAD" "JOB CREATORS" "BILLIONAIRES BAD!!!!" "__JOB__ GO BYE BYE"
• zaroth 6y ago
  Think about how hard Founders work to efficiently divide up the equity pool of their company in order to entice and retain top talent. Consider that the State and Federal government is already a silent partner to the tune of ~20% of the company profits, and then again ~20% on capital gains. Every little bit more carved out for the government is just reducing the portion left which has to justify the risk/return proposition. There's another problem which I'm surprised PG didn't address. Liquidity. A wealth tax means valuing property before it's even perhaps practical to sell it, and while the government might take your last 409a valuation as the means to valuing your net worth, they aren't accepting your shares as payment, only cold hard cash. If you have a large private holding, now you are forced to find ways to throw off cash against that notional value, e.g. by arranging loans against your holdings to pay the tax man. Shares that ultimately never sell could end up being taxed for more then they are ever even worth.
  • garmaine 6y ago
    This. The California wealth tax would kill the startup ecosystem in California, simply because every founder dreams of being a unicorn, but being a unicorn puts you in an untenable position of owing a six or seven figure tax bill every year while you have no liquid assets.
    • zentiggr 6y ago
      Sounds like the bubble would naturally dry up and the "burn the cash, take the payout and run" culture would start to heal. Having startups that grow profitable, useful things at a healthy pace and that give back a small slice of their overall growth sounds like a pretty stable business model.
  • dalbasal 6y ago
    IMO, the honest way to think of a wealth tax is as am implied income tax. That is, a tax on the implied income from wealth. Instead of calculating CGT, which doesn't work very well in practice, just tax the wealth. This avoids all the problem incentive structure, and even worse tax code structure dealing with the fact that some years you make a return and in other years you make a loss. Liquidity is solvable, if we're actually talking about a super wealthy tax with a floor of $50m and above. At that point, you are dealing with people individually. In terms of "reducing the portion left which has to justify the risk/return proposition..." I don't think this applies. You have $1bn. You owe $10m in taxes. You owe that tax regardless of what you invest in, conservatively or otherwise. It even solves some of that problem, if it replaces CGT. A CGT without loopholes (doesn't exist, and won't) disincentivizes risk. If you win big, you pay big. But of you lose, the IRS doesn't pay you. That incentivizes playing it safe. IRL tax credits exist, and those more than compensate big CGT payers. In some famous example (eg Trump) derivative policies are big money generators. IE, invest for tax credit, not market gains.
• Zak 6y ago
  > One point that PG does address which is often skipped over is that a wealth tax is a "deplete billionaires" policy It has long been my impression that eliminating or reducing billionaires is the primary goal of wealth tax advocates other than those whose advocacy primarily consists of sharing memes on social media. Raising revenue is largely a red herring.
  • rswail 6y ago
    It's the primary goal of a wealth tax. To reduce the concentration of wealth in a small minority of the population. Let's say that there was a 1% wealth tax on all wealth over $1b. So Bezos would have to liquidate say $1b each year for that tax. Yes, he'd have to sell Amazon stock. That would feed into the stock price of Amazon in terms of increased liquidity of the stock, but it has zero effect on the operations or growth or income of Amazon itself. Arguably it would have little or no impact on Bezos' activities. He would still be running Amazon, he would still be working to make it grow etc. What would change is that over time, the wealth would be distributed via the items funded by that tax.
    • dublin 6y ago
      It's worth noting that Bezos does exactly this every year (sell $1B of his stock annually). It's how he funds Blue Origin, among other new ventures.
    • zepto 6y ago
      “The wealth would be distributed by the items funded by that tax” This is highly questionable - the idea that a dollar of tax is equivalent to a dollar of wealth distributed rests on the assumption that elected officials can deploy the money efficiently. I’m not claiming that government can never do this - clearly nation building has been done before.
    • dane-pgp 6y ago
      > Let's say that there was a 1% wealth tax on all wealth over $1b. This is what the article disingenuously(?) leaves out. If a society wanted to deplete billionaires, it could put a wealth tax on just the dollars above and including the billionth dollar that an individual nominally owned. The idea is that anyone who isn't a billionaire wouldn't be affected. Making this tax rate be 1% has the added advantage that you can call it "the 1% tax", because it would only apply to (a small subset of) the top 1% of richest people. I don't know how many Americans became multi-billionaires by founding companies in their twenties, but here is a list of billionaire founders of internet companies: http://news.bbc.co.uk/1/hi/technology/8562379.stm http://news.bbc.co.uk/1/hi/technology/8562379.stm
• zozbot234 6y ago
  > The most important nuance being that you control most of this wealth for most of this time and will be paying your taxes out of interest. Then a wealth tax boils down to a punitive tax on interest income. Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way. (See, e.g. Larry Ellison's yachts as an especially obvious example of billionaires' consumption.) That's an "economic policy tool", alright. It's not as clear that it's a sensible one.
  • jorams 6y ago
    > Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way. That's the goal. The idea is that society doesn't need billionaires, so you force them to get rid of their wealth. Either through taxation, or by spending it on things that benefit others.
    • zozbot234 6y ago
      Interesting question there - do Larry Ellison's yachts "benefit others"? (And i mean beyond the immediate effect of "spending money". We should always keep in mind that opportunity cost is a thing, and that investment involves plenty of "spending" and economic activity of its own.)
      • bialpio 6y ago
        They do. He's paying sales tax to buy them, he's paying for the wages for people that built then. Consumption is when the money starts to trickle down. I think I'd be ok with forcing super-rich to spend their money or taxing then above some level. Let's make the limit somewhere around GDP of a smaller European country (Slovakia - ~105bn, Ukraine - ~140bn) & tax above that.
      • jorams 6y ago
        > do Larry Ellison's yachts "benefit others"? (And i mean beyond the immediate effect of "spending money". I don't think that's a useful question, though the answer is generally no. Yachts, or more generally pleasure craft, are a form of entertainment. The owner spends large and ever-growing amounts of money, funding other people's lives, in exchange for some kind of fun for themselves and their immediate circle. Larry Ellison could certainly make them benefit others by, say, using them to provide housing for the homeless, but that's not a part of the primary equation. > We should always keep in mind that opportunity cost is a thing, and that investment involves plenty of "spending" and economic activity of its own.) The economic activity of moving around vast sums of money benefits very few people, and those are generally not the people working multiple jobs just to make ends meet. That's the reason people want a wealth tax: concentrating wealth to such an extent benefits almost nobody.
• Reedx 6y ago
  In the case of billionaires like Musk, Bezos, Gates... It's unrealistic to think that the government would make better use of that capital. It'll absolutely be wasted in comparison. Taking ever more capital from the most effective/productive allocators and giving it to one of the least effective doesn't strike me as a good strategy. A case like the Walton heirs is another story. I suspect we'd be better off taxing most of that wealth.
  • cik2e 6y ago
    Musk, Bezos, and Gates would have access to all of the funding in the world for any future ventures. What the government could do is lower taxes on everyone else.
    • pc86 6y ago
      I have not seen a single wealth tax proposal suggest the funds be used to lower taxes for others, and it's incredibly disingenuous to suggest any wealth tax proponents want to do that. These types of tax proposals are always to fund other services.
      • cik2e 6y ago
        How's it disingenuous to propose that the government could do something with a wealth tax besides spending it on social programs? If we're talking about what leftist politicians would want to do with the money, then we shouldn't be talking about a wealth tax at all, because it's likely never going to ever pass a national scale.
        • pc86 6y ago
          It's disingenuous to propose it as a viable option when every proposal involves spending the money on something. These things do not happen in a vacuum. Nobody is talking about "leftist politicians."
          • cik2e 6y ago
• mrlala 6y ago
  One argument I would make is that it's a LOT easier to just move to another european country and you are still very close to your home country. Capital flight in the US is logistically much more difficult than in europe I would imagine. >"are billionaires bad for the rest of us?" That is the premise of a wealth tax, at least the currently popular one. I don't think that's very accurate.. the wealth tax is saying "billionaires have so much excess money that they should be contributing on another layer than the rest of the population". While you can ALSO say "there should be no billionaires / they are bad", that is not what the wealth tax does.
• cryptonector 6y ago
  > But, to be nuanced we also need to address the core question: "are billionaires bad for the rest of us?" That is the premise of a wealth tax, at least the currently popular one. Suppose we impose such a tax. How will that affect wealth formation and accumulation by not-yet-billionaires, and how will it affect existing billionaires? As you say, Bezos and Buffet would continue being billionaires, but if new billionaires became an impossibility, then such a tax will essentially be creating barriers to competition with existing billionaires! That would be a billionaire protectionist measure disguised as a populist measure!! If we see existing billionaires support such a measure, then we'll know they likely don't see it hurting them. Kinda like when Buffet advocated for higher income taxes knowing full well he has no taxable income (all his "income" as most people imagine it is just unrealized -and therefore untaxed- capital gains). Also, the biggest problem with any new tax is that without a hard cap on rates it's difficult to predict what it will be in the future. When the income tax was proposed in the U.S. it was said it would never rise above 5%, but marginal income tax rates in the U.S. have been north of 90% (yet, of course, these never reach the super rich as explained earlier). A wealth tax might come with "it will never be higher than 0.2%!" claims, then rise to 5% anyways. If it comes with such a claim, that limit needs to be baked into the Constitution. Besides the intended political and economic effects of a tax, its unintended economic impact, there's the question of how much revenue it will raise and what that shall be used for. Leviathan never shrinks, so a decision to enlarge it should not be made lightly.
• mikorym 6y ago
  > famously Gerard Depardieu This sounds like a funny inside joke, but I don't get it. We are talking about the French actor, right?
• brlewis 6y ago
  Are taxes only for things that are bad for the rest of us? Perhaps the core question is, "do billionaires owe a larger portion of their success to society at large than regular people do?"
• alasdair_ 6y ago
  Interestingly, the US is perhaps the only major country that makes capital flight like that in France quite difficult: upon renouncing citizenship, there is essentially an immediate wealth tax imposed. The US is also the only major country to demand citizens file US income taxes even though they may never visit or earn in the US for the entire year.
• gamblor956 6y ago
  Oh no! France lost Gerard Depardieu! Whatever will they do! /s In seriousness, I did have a number of French clients fleeing to California after France proposed a wealth tax. One of them famously said (of California): "I love it here! Your taxes are so low!" The downside of a wealth tax compared to other taxes is that it drains a corpus every year. It creates "financial anxiety" in the people it would target, similar to range anxiety in EVs. Even if the target could afford to pay the wealth tax and live comfortably for the rest of their lives of their children's lives, they are suddenly terrified that they will be taxed into the poorhouse if they misspend their money, and that anxiety drives them toward places without a wealth tax. Switzerland isn't a good example of why a wealth tax would work, since it's openly acknowledged that nobody actually pays the correct tax on their wealth; it is the same reason that Swiss banks were the financial institutions of choice for criminals and dictators for decades. (If I was being too subtle: the Swiss are notorious for under-reporting financial assets, and their banks are even more notorious for hiding the assets of account holders.)