4 ms·

Your first point doesn't really apply, because PG is talking about someone who starts a successful startup, which—at least for Silicon Valley levels of success—

Your first point doesn't really apply, because PG is talking about someone who starts a successful startup, which—at least for Silicon Valley levels of success—would be above the relevant floor. (And he specifies: "over the threshold at which the tax starts".) Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. Unless you think all developed countries are going to implement the wealth tax. I don't think your third point speaks to the issue. The article didn't mention control of the startup, only finances, and I don't think the successful 28-year-old startup founder who's looking at the impact of a wealth tax 60 years in the future is primarily concerned with control of the company at age 88. Your fourth point also makes no difference. Suppose you make $1 billion, and you earn zero interest on it. The wealth tax takes away 45.3% of that over 60 years. Suppose you make $1 billion and compounded interest at 4% would increase it to $10.5 billion over the course of 60 years. The 1% wealth tax still takes away 45.3% of that over 60 years, leaving you with 54.7% of the $10.5 billion. Multiplication is commutative. To your fifth point—well, does anyone leave for tax havens, or arrange for as much as possible of a company to be officially inside a tax haven? I think they do. A wealth tax that ends up making a large difference over the long term might make a large difference in how many people leave. I don't think you've shown that PG "doesn't model how any sensible wealth tax would be implemented or paid" in any significant way.

patmcc 6y ago
The wealth taxes being talked about, broadly, would impact people with wealth of tens of millions of dollars and above. But PG talks about what they would "mean in practice for a startup founder." Already he's made a clever rhetorical move and conflated startup founders (a large group) with very successful startup founder (a much much smaller group), in attempting to broaden the people who look like they're impacted directly by his argument. Over the medium-long term, I think any countries that don't implement a wealth tax (or some other way of addressing wealth inequality) will not remain developed countries. PG uses 'stock' throughout the essay as opposed to 'wealth', and I believe he did so on purpose; he's appealing to emotion. Startup founders care a great deal about control and ownership, more so than wealth in the abstract. Look later as well - "And at 5% this threshold is getting asymptotically close to being an upper bound on how much of the company you get to keep." - he's directly talking about ownership/control rather than simple wealth. Yes, this is obviously true. But again, PG's phrasing here is key; he's making it seem like you'll have only 55% of what you start with, which isn't remotely true. It just means your wealth compounds at a lower rate. Much less impactful, clearly. Maybe. A wealth tax on its own doesn't solve this, you also need to sort out tax havens. And again, you need to look at the real cost of these people leaving - if a billionaire moves away (instead of paying a wealth tax) what does that cost us?
- pfooti 6y ago
  One could perhaps argue that billionaires moving to other countries (and therefore taking their political lobbying that creates environments where becoming a billionaire is possible) might be a net gain for the country losing the billionaires. As other people have said in one form or another, becoming a millionaire is a reason for celebration, but billionaires are policy failures.
thephyber 6y ago
> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. This is an incredibly simplistic take. When choosing a USA with a hypothetical wealth tax versus other existing countries, the contrasts are far larger than just a wealth tax. The USA has increasingly bad health/medical costs, university tuition costs, cost of living in affluent areas, deteriorating infrastructure, political strife, etc. It's important to talk about this hypothetical wealth tax as a weighted component of all of the likely decision points.
afpx 6y ago
Of course all "developed" countries (i.e. countries with the high levels of education, health, and safety that can support development of high-margin industries) will institute a wealth tax. And, for the lucky ones that thrive without one, they'll eventually adopt it, too.
blacklight 6y ago
> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. I can't get why many who advocate against a wealth tax are afraid of raising a single penny on a billionaire amid the fears of scaring him off the country. This is really a bad refuse of Reagan politics that hasn't proved to be true. Moving wealth around while bypassing capital controls is expensive. Relocating a whole business is even more expensive. And if someone really wants to do it to make sure that they don't pay taxes on their billionaire wealth, then they're welcome to go - a developed country has plenty of talent to replace them, and in many cases there will be one less lobbyist to keep inequalities high and politics hostage of his own interests. Lots of taxes have been raised on low-earning classes in the past decades without the blink of an eye, but as soon as someone proposes a tax on the rich some people cry out against the exodus of billionaires. > Suppose you make $1 billion, and you earn zero interest on it. The wealth tax takes away 45.3% of that over 60 years. Suppose you make $1 billion and compounded interest at 4% would increase it to $10.5 billion over the course of 60 years. The 1% wealth tax still takes away 45.3% of that over 60 years, leaving you with 54.7% of the $10.5 billion. Multiplication is commutative. Taxation on real estate isn't that different. As an house owner I pay every year a tax that is proportional to the value of my house. Sure, if I look at how much the tax compounds over 60 years I may get scared, but on a yearly basis I can barely feel its impact on my finances. And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society. I don't get how someone sitting on a $1 billion wealth may consider a $10 million tax unsustainable. A large house, a yacht, $1 billion shares in a company or a luxury car are privileges reserved for few, and it's unfair to just let those few sit on such wealth while the government every year has to raise money from those who earn much less. That inevitably ends up with most of the wealth is accumulated in the hands of few, and that's a scenario that society should avoid at all costs.
- ghostwriter 6y ago
  > And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society. I don't think that you are paying your fair share, because I am not able to own a house in the middle of Amsterdam, and I think that the wealth gap between us is too big. Your cushy privileged lifestyle is unfair and you should pay more. Consider giving away four fifths of your remaining earnings left after your monthly bills.
rattray 6y ago
On the fourth point, the distinction is material. A bystander may feel bad for the founder if their wealth drops from $1B to a mere $550mm. But the bystander is unlikely to feel bad for the founder if their wealth only rises, naturally, to $5.5B or so. If the real (ie inflation adjusted) rate of growth of capital is greater than the wealth tax, the wealth tax does not cause _actual loss_ to the wealthy. The nature of the psychology of loss aversion means the distinction between "loss" and "reduced gain" matters. The loss may sting enough to cause the founder of move, but reduced gain will only matter if it prevents them from achieving a material goal.

patmcc 6y ago

The wealth taxes being talked about, broadly, would impact people with wealth of tens of millions of dollars and above. But PG talks about what they would "mean in practice for a startup founder." Already he's made a clever rhetorical move and conflated startup founders (a large group) with very successful startup founder (a much much smaller group), in attempting to broaden the people who look like they're impacted directly by his argument. Over the medium-long term, I think any countries that don't implement a wealth tax (or some other way of addressing wealth inequality) will not remain developed countries. PG uses 'stock' throughout the essay as opposed to 'wealth', and I believe he did so on purpose; he's appealing to emotion. Startup founders care a great deal about control and ownership, more so than wealth in the abstract. Look later as well - "And at 5% this threshold is getting asymptotically close to being an upper bound on how much of the company you get to keep." - he's directly talking about ownership/control rather than simple wealth. Yes, this is obviously true. But again, PG's phrasing here is key; he's making it seem like you'll have only 55% of what you start with, which isn't remotely true. It just means your wealth compounds at a lower rate. Much less impactful, clearly. Maybe. A wealth tax on its own doesn't solve this, you also need to sort out tax havens. And again, you need to look at the real cost of these people leaving - if a billionaire moves away (instead of paying a wealth tax) what does that cost us?

pfooti 6y ago
One could perhaps argue that billionaires moving to other countries (and therefore taking their political lobbying that creates environments where becoming a billionaire is possible) might be a net gain for the country losing the billionaires. As other people have said in one form or another, becoming a millionaire is a reason for celebration, but billionaires are policy failures.

thephyber 6y ago

> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. This is an incredibly simplistic take. When choosing a USA with a hypothetical wealth tax versus other existing countries, the contrasts are far larger than just a wealth tax. The USA has increasingly bad health/medical costs, university tuition costs, cost of living in affluent areas, deteriorating infrastructure, political strife, etc. It's important to talk about this hypothetical wealth tax as a weighted component of all of the likely decision points.

afpx 6y ago

Of course all "developed" countries (i.e. countries with the high levels of education, health, and safety that can support development of high-margin industries) will institute a wealth tax. And, for the lucky ones that thrive without one, they'll eventually adopt it, too.

blacklight 6y ago

> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. I can't get why many who advocate against a wealth tax are afraid of raising a single penny on a billionaire amid the fears of scaring him off the country. This is really a bad refuse of Reagan politics that hasn't proved to be true. Moving wealth around while bypassing capital controls is expensive. Relocating a whole business is even more expensive. And if someone really wants to do it to make sure that they don't pay taxes on their billionaire wealth, then they're welcome to go - a developed country has plenty of talent to replace them, and in many cases there will be one less lobbyist to keep inequalities high and politics hostage of his own interests. Lots of taxes have been raised on low-earning classes in the past decades without the blink of an eye, but as soon as someone proposes a tax on the rich some people cry out against the exodus of billionaires. > Suppose you make $1 billion, and you earn zero interest on it. The wealth tax takes away 45.3% of that over 60 years. Suppose you make $1 billion and compounded interest at 4% would increase it to $10.5 billion over the course of 60 years. The 1% wealth tax still takes away 45.3% of that over 60 years, leaving you with 54.7% of the $10.5 billion. Multiplication is commutative. Taxation on real estate isn't that different. As an house owner I pay every year a tax that is proportional to the value of my house. Sure, if I look at how much the tax compounds over 60 years I may get scared, but on a yearly basis I can barely feel its impact on my finances. And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society. I don't get how someone sitting on a $1 billion wealth may consider a $10 million tax unsustainable. A large house, a yacht, $1 billion shares in a company or a luxury car are privileges reserved for few, and it's unfair to just let those few sit on such wealth while the government every year has to raise money from those who earn much less. That inevitably ends up with most of the wealth is accumulated in the hands of few, and that's a scenario that society should avoid at all costs.

ghostwriter 6y ago
> And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society. I don't think that you are paying your fair share, because I am not able to own a house in the middle of Amsterdam, and I think that the wealth gap between us is too big. Your cushy privileged lifestyle is unfair and you should pay more. Consider giving away four fifths of your remaining earnings left after your monthly bills.

rattray 6y ago

On the fourth point, the distinction is material. A bystander may feel bad for the founder if their wealth drops from $1B to a mere $550mm. But the bystander is unlikely to feel bad for the founder if their wealth only rises, naturally, to $5.5B or so. If the real (ie inflation adjusted) rate of growth of capital is greater than the wealth tax, the wealth tax does not cause _actual loss_ to the wealthy. The nature of the psychology of loss aversion means the distinction between "loss" and "reduced gain" matters. The loss may sting enough to cause the founder of move, but reduced gain will only matter if it prevents them from achieving a material goal.