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>First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Uh huh. >Second

>First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher). Uh huh. >Second, taxes don't disappear into nothingness - they pay for civilization. But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth tax and then arguing for the necessity of taxes when challenged. Taxes are a necessary part of a functioning modern economy. Wealth tax is not. >Yes, over the long term they'll lose some wealth, but not necessarily control of their company, unless that's the decision they make. No. What are you talking about? The math is very simple. You will lose control at some point, because there's only so many ways you can rearrange the deck chairs. And no, dividends are not an option because issuing a dividend may not be in the best interest of the company. Dividends are also taxed separately. That you think taking out debt to cover wealth taxes is a solution is insanity. >Fifth, the idea that people "will just move to another country" is very silly But that's exactly what happens. We have data on this from various experiments. It doesn't bring the revenue you expect it to because there is capital flight and brain drain from the country in response - and when that is taken into account, you may end up with a net loss in tax revenue. It's also expensive to administer and enforce because net-worth is not easy to calculate. It's no coincidence that this form taxation has been falling out of favor. >I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future, No. That is a strawman if I ever seen one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?

graeme 6y ago
>>Second, taxes don't disappear into nothingness - they pay for civilization. >But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth tax and then arguing for the necessity of taxes when challenged. Taxes are a necessary part of a functioning modern economy. Wealth tax is not. Indeed. The parent is arguing that the wealth tax is better than, say, a carbon tax, which is considered a fairly efficient form of taxation. > >I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future, >No. That is a strawman if I ever see one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences? To add to this, Paul Graham doesn’t live in California, and would not pay the tax. He’s opposed on principle.
- patmcc 6y ago
  We can have both carbon taxes AND wealth taxes, of course. Carbon taxes seem to be an excellent way to curb carbon emissions, which is necessary, but they're also regressive, and unlikely to be sufficient to pay for the things we expect the government to provide. PG may not be impacted by a California wealth tax, but that doesn't mean his opposition isn't self-interested. If it succeeds in California it could be taken up by other states, or the US as a whole - maybe wiser (in PG's view) to nip it in the bud.
  - tekknik 6y ago
    It may be taken up by other states, but the US as a whole seems a bit of a stretch. The typical liberal states, sure.
  - sitver 6y ago
    I think he lives in the UK
cryptoz 6y ago
PG is tone deaf and missing the mood of the nation here. He says: > Even a .5% wealth tax would start to keep founders away from a state or country that imposed it. Mr Graham doesn't consider the possibility of startup founders leaving / kept away from a place that doesn't impose a wealth tax. I am not a successful startup founder (yet), but I would consider it my duty to live in /start a company in a place with better laws and taxes that are more equitable for everyone. Money is not the only thing that drives startup founders to do big things. Complaining about a wealth tax and suggesting it will ruin things in the valley / CA due to people leaving completely ignores the societal improvements that could come from those tax dollars. The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy! Why would the future prospective wealthy startup founders want to live in a massively unequal society, that is bent on increasing incoming inequality (the topic of another recent PG essay, where he argues that decreasing wealth inequality is a bad idea)? I sure wouldn't. Mr Graham, a lot of startup founders may leave if large measures to improve society like a wealth tax are not 'imposed'. You said, > Taxes are a necessary part of a functioning modern economy. Wealth tax is not. But you don't back this up. Why should wealth tax not be a part of modern economy? Modern economies are broken right now, obviously, for most people anyway, so keeping the status quo is a red flag and a bad sign. > Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences? If that is his position, he does not explain it very well. Especially with the context of many of his recent essays, he does seem especially concerned with his image and wealth. What about the unintended consequences of adopting policies that specifically intend to increase wealth inequality? PG doesn't seem to much consider the consequences that his models/opinions/plans would have on other people if implemented.
- macspoofing 6y ago
  >PG is tone deaf and missing the mood of the nation here. Twitter is not 'the mood of the nation'. You are not representative of 'the mood of the nation'. In fact, you're an outlier. >The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy! You're trying to pull the same fast one as OP. Wealth tax is not the same as increasing taxes on the wealthy. You can make an argument that taxes should be increased and at the same time see that the wealth tax is a terrible way to do it. > Why should wealth tax not be a part of modern economy? Because it's a bad tax. It doesn't work. It doesn't bring revenue you think it does. It's expensive to administer and enforce. And it has many bad unintended consequences.
alkonaut 6y ago
> But there are bad taxes. There is such a thing as too much tax. Having a wealth tax doesn't mean the total tax goes up. Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut, otherwise it invariably becomes a discussion about whether high/low/more/less taxes are good.
- 1123581321 6y ago
  Historically a wealth tax has been an increase in taxes that ironically led to increased regressive taxes as the projected gains failed to materialize due to business restructuring.
  - _jahh 6y ago
    citation needed
    - tekknik 6y ago
      > Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut from parent, citation also needed.
quantified 6y ago
Mr Graham may have good reasons to be against this tax but he hasn’t argued them here. The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his. As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me. I think most of the reasoned objection to various taxes was summed up by Bill Clinton in his first campaign: what people mind is not getting what they’ve paid for by their taxes.
- cryptoz 6y ago
  > The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his. OT but sadly this has been my reaction to most of his recent (last few years?) posts. :( He's definitely lost the well-reasoned, useful insight and interesting thoughts he had previously in his essays. I also agree with your other points FWIW.
  - afpx 6y ago
    Word. Graham jumped the shark quite a few essays ago. He's veered quite far from his "Hackers and Painters", circa 2004.
- AdrianB1 6y ago
  >As an occasional entrepeneur I do not at all mind being subject to this tax. That is not an argument. You can be a masochist and love to be beaten, it is not an argument people should be beaten. If it does not matter to you it does not mean it does not matter to others, it does not mean you are representative and it does not mean it is morally good.
- bhawks 6y ago
  The wealth tax as proposed should be concerning to everyone in CA whether they pay the tax or not. It will be the state's 4th largest revenue stream but will be paid for by only 40,000~ people. It will definitely be volatile due to people leaving (see the governor of NY making personal appeals to wealthy NYers not to leave). The volatility will make hurt programs funded by the revenues. CA's budget already goes thru painful boom / bust cycles because it relies so heavily on market gains - see all the painful cuts during the financial crisis. This adds to that instability. If you want more revenue streams try making it so that they're sustainable and not subject to the whims of the ultra riches home address or how well the stock market does this year.
patmcc 6y ago
Do any wealth taxes being seriously discussed not have floors/exemptions for primary residences/marginal rates/whatever? Why is a wealth tax a bad tax? Why is it worse than income tax or a VAT or anything else we currently do? Many places currently have property taxes (a type of wealth tax) and they tend to work well. You need to redo your math. If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong. So ~1% of your wealth going to taxes is eminently affordable. No need to lose control. Capital flight can be handled with exit taxes and restrictions on foreign ownership. Brain drain is usually high income (not high net worth) individuals leaving. The reason net-worth based taxation has been "falling out of favour" is because billionaires have an outsized impact on media and politics, and that very clearly suits their interests. He could be - but if that was the case he'd have better arguments. Why didn't he talk about capital flight and brain drain, and how other taxes would be more appropriate? He's a skilled essayist; he chose his words carefully, and he used language around stocks, founders, and ownership specifically to appeal to tech geeks who expect to start successful companies.
- TazeTSchnitzel 6y ago
  > Many places currently have property taxes (a type of wealth tax) and they tend to work well. Don't forget inheritance tax/estate tax! It's a wealth tax, just applied after (or near to) death.
  - patmcc 6y ago
    I'm pretty opposed to estate taxes, they tend to penalize sudden deaths really heavily and place unfair stress and complication on widows/widowers. Plus the rates are sometimes high enough that they can lead to asset liquidation, selling of companies, etc. which I'm not a huge fan of. An annual wealth tax is much more sustainable for an individual or business.
    - tekknik 6y ago
      How does an estate tax place undue complications on widows but a wealth tax doesn’t place undue complications on individuals?
fidlestix 6y ago
What about > Fourth, this effectively ignores that wealth is a thing that grows and compounds. You absolutely will not "lose control at some point" so long as the value of your company/stock keeps pace with inflation + wealth tax. It's the simplest, most straightforward reason this "modeling" is bunk.

graeme 6y ago

>>Second, taxes don't disappear into nothingness - they pay for civilization. >But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth tax and then arguing for the necessity of taxes when challenged. Taxes are a necessary part of a functioning modern economy. Wealth tax is not. Indeed. The parent is arguing that the wealth tax is better than, say, a carbon tax, which is considered a fairly efficient form of taxation. > >I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future, >No. That is a strawman if I ever see one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences? To add to this, Paul Graham doesn’t live in California, and would not pay the tax. He’s opposed on principle.

patmcc 6y ago
We can have both carbon taxes AND wealth taxes, of course. Carbon taxes seem to be an excellent way to curb carbon emissions, which is necessary, but they're also regressive, and unlikely to be sufficient to pay for the things we expect the government to provide. PG may not be impacted by a California wealth tax, but that doesn't mean his opposition isn't self-interested. If it succeeds in California it could be taken up by other states, or the US as a whole - maybe wiser (in PG's view) to nip it in the bud.
- tekknik 6y ago
  It may be taken up by other states, but the US as a whole seems a bit of a stretch. The typical liberal states, sure.
- sitver 6y ago
  I think he lives in the UK

cryptoz 6y ago

PG is tone deaf and missing the mood of the nation here. He says: > Even a .5% wealth tax would start to keep founders away from a state or country that imposed it. Mr Graham doesn't consider the possibility of startup founders leaving / kept away from a place that doesn't impose a wealth tax. I am not a successful startup founder (yet), but I would consider it my duty to live in /start a company in a place with better laws and taxes that are more equitable for everyone. Money is not the only thing that drives startup founders to do big things. Complaining about a wealth tax and suggesting it will ruin things in the valley / CA due to people leaving completely ignores the societal improvements that could come from those tax dollars. The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy! Why would the future prospective wealthy startup founders want to live in a massively unequal society, that is bent on increasing incoming inequality (the topic of another recent PG essay, where he argues that decreasing wealth inequality is a bad idea)? I sure wouldn't. Mr Graham, a lot of startup founders may leave if large measures to improve society like a wealth tax are not 'imposed'. You said, > Taxes are a necessary part of a functioning modern economy. Wealth tax is not. But you don't back this up. Why should wealth tax not be a part of modern economy? Modern economies are broken right now, obviously, for most people anyway, so keeping the status quo is a red flag and a bad sign. > Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences? If that is his position, he does not explain it very well. Especially with the context of many of his recent essays, he does seem especially concerned with his image and wealth. What about the unintended consequences of adopting policies that specifically intend to increase wealth inequality? PG doesn't seem to much consider the consequences that his models/opinions/plans would have on other people if implemented.

macspoofing 6y ago
>PG is tone deaf and missing the mood of the nation here. Twitter is not 'the mood of the nation'. You are not representative of 'the mood of the nation'. In fact, you're an outlier. >The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy! You're trying to pull the same fast one as OP. Wealth tax is not the same as increasing taxes on the wealthy. You can make an argument that taxes should be increased and at the same time see that the wealth tax is a terrible way to do it. > Why should wealth tax not be a part of modern economy? Because it's a bad tax. It doesn't work. It doesn't bring revenue you think it does. It's expensive to administer and enforce. And it has many bad unintended consequences.

alkonaut 6y ago

> But there are bad taxes. There is such a thing as too much tax. Having a wealth tax doesn't mean the total tax goes up. Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut, otherwise it invariably becomes a discussion about whether high/low/more/less taxes are good.

1123581321 6y ago
Historically a wealth tax has been an increase in taxes that ironically led to increased regressive taxes as the projected gains failed to materialize due to business restructuring.
- _jahh 6y ago
  citation needed
  - tekknik 6y ago
    > Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut from parent, citation also needed.

quantified 6y ago

Mr Graham may have good reasons to be against this tax but he hasn’t argued them here. The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his. As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me. I think most of the reasoned objection to various taxes was summed up by Bill Clinton in his first campaign: what people mind is not getting what they’ve paid for by their taxes.

cryptoz 6y ago
> The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his. OT but sadly this has been my reaction to most of his recent (last few years?) posts. :( He's definitely lost the well-reasoned, useful insight and interesting thoughts he had previously in his essays. I also agree with your other points FWIW.
- afpx 6y ago
  Word. Graham jumped the shark quite a few essays ago. He's veered quite far from his "Hackers and Painters", circa 2004.
AdrianB1 6y ago
>As an occasional entrepeneur I do not at all mind being subject to this tax. That is not an argument. You can be a masochist and love to be beaten, it is not an argument people should be beaten. If it does not matter to you it does not mean it does not matter to others, it does not mean you are representative and it does not mean it is morally good.
bhawks 6y ago
The wealth tax as proposed should be concerning to everyone in CA whether they pay the tax or not. It will be the state's 4th largest revenue stream but will be paid for by only 40,000~ people. It will definitely be volatile due to people leaving (see the governor of NY making personal appeals to wealthy NYers not to leave). The volatility will make hurt programs funded by the revenues. CA's budget already goes thru painful boom / bust cycles because it relies so heavily on market gains - see all the painful cuts during the financial crisis. This adds to that instability. If you want more revenue streams try making it so that they're sustainable and not subject to the whims of the ultra riches home address or how well the stock market does this year.

patmcc 6y ago

Do any wealth taxes being seriously discussed not have floors/exemptions for primary residences/marginal rates/whatever? Why is a wealth tax a bad tax? Why is it worse than income tax or a VAT or anything else we currently do? Many places currently have property taxes (a type of wealth tax) and they tend to work well. You need to redo your math. If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong. So ~1% of your wealth going to taxes is eminently affordable. No need to lose control. Capital flight can be handled with exit taxes and restrictions on foreign ownership. Brain drain is usually high income (not high net worth) individuals leaving. The reason net-worth based taxation has been "falling out of favour" is because billionaires have an outsized impact on media and politics, and that very clearly suits their interests. He could be - but if that was the case he'd have better arguments. Why didn't he talk about capital flight and brain drain, and how other taxes would be more appropriate? He's a skilled essayist; he chose his words carefully, and he used language around stocks, founders, and ownership specifically to appeal to tech geeks who expect to start successful companies.

TazeTSchnitzel 6y ago
> Many places currently have property taxes (a type of wealth tax) and they tend to work well. Don't forget inheritance tax/estate tax! It's a wealth tax, just applied after (or near to) death.
- patmcc 6y ago
  I'm pretty opposed to estate taxes, they tend to penalize sudden deaths really heavily and place unfair stress and complication on widows/widowers. Plus the rates are sometimes high enough that they can lead to asset liquidation, selling of companies, etc. which I'm not a huge fan of. An annual wealth tax is much more sustainable for an individual or business.
  - tekknik 6y ago
    How does an estate tax place undue complications on widows but a wealth tax doesn’t place undue complications on individuals?

fidlestix 6y ago

What about > Fourth, this effectively ignores that wealth is a thing that grows and compounds. You absolutely will not "lose control at some point" so long as the value of your company/stock keeps pace with inflation + wealth tax. It's the simplest, most straightforward reason this "modeling" is bunk.