4 ms·

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 do

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.

zozbot234 6y ago
The implied income from wealth is zero, because e.g. $10 being spent ten years from now is less valuable than $10 being spent today, in a way that - in expectation - accounts precisely for the apparent "income" yielded by $10 (as 'wealth') over ten years.
- zxcmx 6y ago
  Billionaires don't hold cash, they hold assets. Property, shares, anything that throws off revenue or grows in value.
  - zozbot234 6y ago
    Sure, but that seemingly-extra "revenue" or "growth" is not free - it comes with offsetting risks. Should people be taxed merely because they made a risky bet that happened to pay off for them?
    - zxcmx 6y ago
      Nothing in this world is risk-free, because the world is inherently uncertain. Holding cash is also risky. We can calculate a risk free rate of return however, and we can also look at historical returns and rates wealth growth to estimate what a "fair" rate might be. But since this is really a "should" question (aka about values), theres not really a right answer. We can mostly just talk about fairness, of which there are many different conceptions. My take: Society has to work hard to preserve the billionaire's wealth. You can't be king without an army, and billionaires exist because of laws, police and a social fabric that lets them keep owning so much stuff. You would otherwise have to be a warlord to keep your hands on so much, and that has its own costs and risks. Perhaps we could look at it as a fee or compensation for the aggregate social guard labour required to preserve the social order that ensures the safety of the billionaire's assets.
      - Mirioron 6y ago
        What happens when some of those billionaires band together and decide that they are better at defending what they have? It'll result in governments being overthrown or the billionaires leaving for somewhere else. Billionaires are still people. If they become too unsatisfied with their treatment, then they will do something about it. Just like everyone else.
        zxcmx 6y ago
        So what I'm suggesting is sort of "user pays" for property rights. Since billionaires have way more property (and associated rights) it's only fair they should pay more for that. Since I assume you're not literally suggesting that billionaires will arm themselves and I dunno, patrol their golf courses and beaches with rocket launchers, I suppose you are suggesting they buy some island and hire private forces, and I dunno, next they have to move their factories or offices there, and presumably hire workers and provide healthcare and education and retirement... I guess if billionaire island seems like a really good deal, workers might move there. Without knowing more about (and assuming it doesn't just get annexed) it kinda sounds like Dubai. Or sure they could try their luck in some other country if they feel safer there. Maybe somewhere that's happy to provide "inequality services" / free guard labour for them. Re: billionaires taking over government so it works in their interests, this has basically already happened and these kinds of wealth tax proposals are a way to balance billionaires existing with the effort needed to sustain them. And seriously when you look at the alternatives 0.5% (say) doesn't seem like such a bad deal.

zozbot234 6y ago

The implied income from wealth is zero, because e.g. $10 being spent ten years from now is less valuable than $10 being spent today, in a way that - in expectation - accounts precisely for the apparent "income" yielded by $10 (as 'wealth') over ten years.

zxcmx 6y ago
Billionaires don't hold cash, they hold assets. Property, shares, anything that throws off revenue or grows in value.
- zozbot234 6y ago
  Sure, but that seemingly-extra "revenue" or "growth" is not free - it comes with offsetting risks. Should people be taxed merely because they made a risky bet that happened to pay off for them?
  - zxcmx 6y ago
    Nothing in this world is risk-free, because the world is inherently uncertain. Holding cash is also risky. We can calculate a risk free rate of return however, and we can also look at historical returns and rates wealth growth to estimate what a "fair" rate might be. But since this is really a "should" question (aka about values), theres not really a right answer. We can mostly just talk about fairness, of which there are many different conceptions. My take: Society has to work hard to preserve the billionaire's wealth. You can't be king without an army, and billionaires exist because of laws, police and a social fabric that lets them keep owning so much stuff. You would otherwise have to be a warlord to keep your hands on so much, and that has its own costs and risks. Perhaps we could look at it as a fee or compensation for the aggregate social guard labour required to preserve the social order that ensures the safety of the billionaire's assets.
    - Mirioron 6y ago
      What happens when some of those billionaires band together and decide that they are better at defending what they have? It'll result in governments being overthrown or the billionaires leaving for somewhere else. Billionaires are still people. If they become too unsatisfied with their treatment, then they will do something about it. Just like everyone else.
      - zxcmx 6y ago
        So what I'm suggesting is sort of "user pays" for property rights. Since billionaires have way more property (and associated rights) it's only fair they should pay more for that. Since I assume you're not literally suggesting that billionaires will arm themselves and I dunno, patrol their golf courses and beaches with rocket launchers, I suppose you are suggesting they buy some island and hire private forces, and I dunno, next they have to move their factories or offices there, and presumably hire workers and provide healthcare and education and retirement... I guess if billionaire island seems like a really good deal, workers might move there. Without knowing more about (and assuming it doesn't just get annexed) it kinda sounds like Dubai. Or sure they could try their luck in some other country if they feel safer there. Maybe somewhere that's happy to provide "inequality services" / free guard labour for them. Re: billionaires taking over government so it works in their interests, this has basically already happened and these kinds of wealth tax proposals are a way to balance billionaires existing with the effort needed to sustain them. And seriously when you look at the alternatives 0.5% (say) doesn't seem like such a bad deal.