10 ms·

> the idea that people [read: super rich] "will just move to another country" is very silly. This is a recurring theme in owners/investors: they always have so

by cies 6y ago

> the idea that people [read: super rich] "will just move to another country" is very silly. This is a recurring theme in owners/investors: they always have some story that they will be forced to leave or close shop if some labour-proteaction-laws (like weekends, or 8h days, or banning of child labour), or taxes are implemented. It's a very old story, there's a history to it. Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left. They did pass law that allow them to shift production overseas. But those laws can be repelled and then we will hear the story again of how this will kill their business,or force them to leave.

macspoofing 6y ago
This is a great illustration that the wealth tax is not about rational policy. It's based on nothing but emotion and ideology. We're not debating here the need for taxes, or labor protections. You don't get to justify bad policies by pointing that there are places where government regulation is called for. Wealth tax is bad policy. Justify it on its own merits.
- lemmsjid 6y ago
  Here's my own-merits justification: Holding on to wealth is an inherently risky prospect. Let's say you are very wealthy but live in an unstable country. You're like a dragon sleeping on its pile of gold. Your wealth is a target. You need to hire considerable amounts of security, stockpile weapons, etc. in order to preserve that wealth. In a stable country, your wealth is not under that risk and you do not need to pay for that risk mitigation. You accrue the benefits of the wealth without taking on the risk. In other words, the act of amassing wealth and keeping it is a direct function of the stability and prosperity of the country in which you live. Because larger amounts of wealth incur larger amounts of risk, it makes sense that a portion of that wealth should be distributed to the country at large: for example, to pay for the less wealthy people who join the military to protect your wealth. Now: what separates that from the existing notion of income tax, capital gains tax, etc? The idea that your wealth, as it is sitting there (not its growth, not what you are earning), is incurring a cost to society, and that society is taking on risk in order to keep your wealth safe. Risk you are not directly paying for. Furthermore, in a stable and modern country holding onto wealth is so safe and protected that you can safely invest your wealth in markets and accrue compound interest. That is the polar opposite of what you would do in an unstable country, where you would keep your wealth hidden away underground, in mattresses, etc. So you are gaining a tremendous wealth-growth benefit by being in a stable country. (This doesn't seem to be addressed in pg's post, which I found confusing, because at 1% taxation you'd be below average market gains and would still gain). I'm not sold on the above argument being a truly compelling and overriding one for wealth tax, it's just some foundational thinking. I do think it explains, in part, why a wealthy person might choose to live in a country with a wealth tax over a country without one, assuming wealth tax became fashionable across most stable countries.
  - cies 6y ago
    Stability is one thing. But super rich like growth opportunity even more. Now what about you can grow your wealth a lot faster if some laws change, would it justify a lobby campaign? Stability is one, but favourable laws for super rich have been passed and are upheld for so long. The fact that fines are not wealth and/or income dependent is a testimony to the dysfunction of democracy. The absolute fines implemented in most countries enable certain "high net worth individuals" to ignore fine all together.
    - klipt 6y ago
      Well depending what the fine is for, absolute values might make more sense. Eg for people overusing water during a drought, if you can fine them enough to build a water recycling plant that recovers the water they wasted, that essentially undoes the harm they caused. Why fine poor people less if they aren't doing less harm?
      - cies 6y ago
        That's not a fine. We the people dont want over use of water by anyone, we implement fine. If its absolute the rich are immune to it. If you want more money from the water used, put a tax on the water. This way water use pays for a new treatment plant.
- cjslep 6y ago
  Your absolutist statements ("based on nothing but emotion and ideology") do nothing but betray your own ignorance. As an American living in Switzerland, a "good policy" (whatever that means) here has resulted in: 1) no capital gains tax, nor any capital losses and certainly no carryover loss shenanigans but 2) using a wealth tax in lieu of capital gains tax to collect any sort of tax on those who have presumably been using their capital to beget more capital. Switzerland does not have any flight of capital, still actively is sought after for parking wealth (which is actually an economy-distorting problem as foreign investors seek to buy stable assets in the Swiss market), and definitely still has an ultra-rich class residing here or moving here. So, if you thought wealth tax alone was bad policy, how does wealth tax plus removing everything-capital-gains (especially the carryover losses which the current US President likes to excessively utilize) sound as effective policy?
  - hrez 6y ago
    Are you talking about "up to $3k/year" carryover? How is that any significant?
    - doktorhladnjak 6y ago
      $3k is just the amount you can deduct from income each year. You can carry over the rest of the loss to future years until you die (not inherited by your heirs).
  - cdfky 6y ago
    Capital is there because foreigners who park their money are not subject to a wealth tax
- billiam 6y ago
  I don't see why. There's a huge body of work that shows that taxing wealth versus capital income is likely to increase productvity while reducing income inequality, which is a hug source of our current economic problems and polarization: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3454385 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3454385. Two MIT economists just won a Nobel prize for showing the benefits not just in a developed economy but globally.
imgabe 6y ago
Then why are all the manufacturing jobs in China and other countries without those labor laws? The remaining jobs in the US are salaried position where "8 hour workday" and "weekend" are often meaningless. Plus we're talking about a wealth tax in California. You can start a company in Nevada and still access the market of California just fine.
- aesh2Xa1 6y ago
  "Then who will purchase your cars?" Let them leave. We have a government all the more for ourselves. We need not purchase products built with the exploitation of cheap, and even forced, labor.
- marakv2 6y ago
  Greater profit. How else are you going to pay a ceo 10mm per year...
- tchaffee 6y ago
  They are not. In 2016 China produced about $4.566 trillion in manufactured goods. Coming in 2nd place, in 2016 the U.S produced about $3.602 trillion in manufactured goods.
  - rubber_duck 6y ago
    He didn't say manufacturing output but jobs, a more relevant number for that argument would be total labor cost in the sector and it's change over time between two countries.
    - tchaffee 6y ago
      That's not such a relevant number because plenty of those US jobs went to automation, not to China. There are still over 12 million manufacturing jobs in the US. About 8% of all US jobs which is a significant chunk. Easily disapproving the wild exaggeration that "all of the manufacturing jobs are in China... ".
- filoeleven 6y ago
nordsieck 6y ago
> Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left. Some didn't leave. There's a reason why Singapore has the highest concentration of millionaires in the world, and it's not because of their school system. I'm not saying that all will leave, or even that most will, but some will.
- dragonwriter 6y ago
  > There's a reason why Singapore has the highest concentration of millionaires in the world, and it's not because of their school system. No, it's because it's a city-state, and millionaires tend to be urban, so comparison with countries with lower urbanization is misleading. New York City (which has a population not much larger, so it's a community of roughly comparable scale that, like Singapore, is 100% urban) has a notably higher concentration of millionaires than Singapore does. (1 in ~8.4 compared to Singapore's 1 in ~20.)
  - nordsieck 6y ago
    > No, it's because it's a city-state, and millionaires tend to be urban, so comparison with countries with lower urbanization is misleading. New York City (which has a population not much larger, so it's a community of roughly comparable scale that, like Singapore, is 100% urban) has a notably higher concentration of millionaires than Singapore does. (1 in ~8.4 compared to Singapore's 1 in ~20.) I'm not sure what your point is. Unless you're claiming that cities spontaneously generate millionaires? From what I can tell, NYC has lots of millionaires primarily because rich people like to live there, so rich and talented people move to NYC from all over the US. The same thing is true of Singapore, except that - as you so rightly point out - there is no "rest of Singapore" for them to come from. Instead, they come from the rest of the World, by necessity.
    - culturestate 6y ago
      > From what I can tell, NYC has lots of millionaires primarily because rich people like to live there, so rich and talented people move to NYC from all over the US. I couldn't find any data on this with a quick search, but my instinct is that NYC probably generates more millionaires than it acquires. You can move to the city straight out of college and become a millionaire in relatively short order if you land the right job; it's a much more circuitous path to get rich by starting, like, a construction company in rural Nebraska and then move to NYC. The same seems (broadly) true of other financial or tech capitals. It's easier to build wealth in cities than outside of them.
CryptoPunk 6y ago
>>Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left. The fact that are still super-rich people doesn't imply that such interventions did not have a negative on the number of people who are super-rich in the US. High taxes have a well-established negative effect on capital formation, and investment in-flows. This isn't some conspiracy theory promoted by the super-rich to manipulate you. I think you're giving the arguments made against high taxes a very shallow treatment.
- romanoderoma 6y ago
  > High taxes have a well-established negative effect on capital formation, and investment That's interesting because in absolute numbers countries with a very high taxation are among the first for number of millionaires. Japan is 3rd, UK is 4th, Germany is 5th, France is 6th, Italy is 7th Compared to the population, Switzerland and Honk Kong are 1st and 2nd In Switzerland taxes are usually low compared to the rest of Europe, but in Geneva they are 45.5%, the highest rate for Switzerland and yet is the city with the highest concentration of millionaires per square kilometer in the World, more than Monaco and SF. Millionaires in Switzerland are almost two times those of the US compared to the population (9.5k/100k vs 5k/100k) 4th is the Netherlands, 5th is Denmark and 7th is Sweden, three countries famous for their high tax rates but equally high social and economical wealth.
  - CryptoPunk 6y ago
    >>That's interesting because in absolute numbers countries with a very high taxation are among the first for number of millionaires. >>Japan is 3rd, UK is 4th, Germany is 5th, France is 6th, Italy is 7th Nearly the entirety of the developed world has high taxes, and the developed world has the most wealthy individuals.
    - romanoderoma 6y ago
      It must mean that high taxes don't have a negative effect on capital formation and that "developed" is more about fairness and justice of the system and not about "how many more billionaires there would be if the system was less fair?"
beagle3 6y ago
But indeed corporations (which are "people") have moved en masse to Ireland. And New Jersey saw a significant exodus towards lower tax states among its richest. It's not empty threats - it's just that the cost of the taxes has to be higher than the cost of moving. For most people, the cost of relocating is higher than the taxes. For the richest people, this wealth tax might just tip the scales. Ted Arison and Eduardo Saverin are the most famous examples I'm aware of - it's mostly because laws were changed after they managed to move without being taxed. Do you think there are no more loopholes? Do you think these are the only cases?

by cies 6y ago

macspoofing 6y ago

This is a great illustration that the wealth tax is not about rational policy. It's based on nothing but emotion and ideology. We're not debating here the need for taxes, or labor protections. You don't get to justify bad policies by pointing that there are places where government regulation is called for. Wealth tax is bad policy. Justify it on its own merits.

lemmsjid 6y ago
Here's my own-merits justification: Holding on to wealth is an inherently risky prospect. Let's say you are very wealthy but live in an unstable country. You're like a dragon sleeping on its pile of gold. Your wealth is a target. You need to hire considerable amounts of security, stockpile weapons, etc. in order to preserve that wealth. In a stable country, your wealth is not under that risk and you do not need to pay for that risk mitigation. You accrue the benefits of the wealth without taking on the risk. In other words, the act of amassing wealth and keeping it is a direct function of the stability and prosperity of the country in which you live. Because larger amounts of wealth incur larger amounts of risk, it makes sense that a portion of that wealth should be distributed to the country at large: for example, to pay for the less wealthy people who join the military to protect your wealth. Now: what separates that from the existing notion of income tax, capital gains tax, etc? The idea that your wealth, as it is sitting there (not its growth, not what you are earning), is incurring a cost to society, and that society is taking on risk in order to keep your wealth safe. Risk you are not directly paying for. Furthermore, in a stable and modern country holding onto wealth is so safe and protected that you can safely invest your wealth in markets and accrue compound interest. That is the polar opposite of what you would do in an unstable country, where you would keep your wealth hidden away underground, in mattresses, etc. So you are gaining a tremendous wealth-growth benefit by being in a stable country. (This doesn't seem to be addressed in pg's post, which I found confusing, because at 1% taxation you'd be below average market gains and would still gain). I'm not sold on the above argument being a truly compelling and overriding one for wealth tax, it's just some foundational thinking. I do think it explains, in part, why a wealthy person might choose to live in a country with a wealth tax over a country without one, assuming wealth tax became fashionable across most stable countries.
- cies 6y ago
  Stability is one thing. But super rich like growth opportunity even more. Now what about you can grow your wealth a lot faster if some laws change, would it justify a lobby campaign? Stability is one, but favourable laws for super rich have been passed and are upheld for so long. The fact that fines are not wealth and/or income dependent is a testimony to the dysfunction of democracy. The absolute fines implemented in most countries enable certain "high net worth individuals" to ignore fine all together.
  - klipt 6y ago
    Well depending what the fine is for, absolute values might make more sense. Eg for people overusing water during a drought, if you can fine them enough to build a water recycling plant that recovers the water they wasted, that essentially undoes the harm they caused. Why fine poor people less if they aren't doing less harm?
    - cies 6y ago
      That's not a fine. We the people dont want over use of water by anyone, we implement fine. If its absolute the rich are immune to it. If you want more money from the water used, put a tax on the water. This way water use pays for a new treatment plant.
cjslep 6y ago
Your absolutist statements ("based on nothing but emotion and ideology") do nothing but betray your own ignorance. As an American living in Switzerland, a "good policy" (whatever that means) here has resulted in: 1) no capital gains tax, nor any capital losses and certainly no carryover loss shenanigans but 2) using a wealth tax in lieu of capital gains tax to collect any sort of tax on those who have presumably been using their capital to beget more capital. Switzerland does not have any flight of capital, still actively is sought after for parking wealth (which is actually an economy-distorting problem as foreign investors seek to buy stable assets in the Swiss market), and definitely still has an ultra-rich class residing here or moving here. So, if you thought wealth tax alone was bad policy, how does wealth tax plus removing everything-capital-gains (especially the carryover losses which the current US President likes to excessively utilize) sound as effective policy?
- hrez 6y ago
  Are you talking about "up to $3k/year" carryover? How is that any significant?
  - doktorhladnjak 6y ago
    $3k is just the amount you can deduct from income each year. You can carry over the rest of the loss to future years until you die (not inherited by your heirs).
- cdfky 6y ago
  Capital is there because foreigners who park their money are not subject to a wealth tax
billiam 6y ago
I don't see why. There's a huge body of work that shows that taxing wealth versus capital income is likely to increase productvity while reducing income inequality, which is a hug source of our current economic problems and polarization: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3454385 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3454385. Two MIT economists just won a Nobel prize for showing the benefits not just in a developed economy but globally.

imgabe 6y ago

Then why are all the manufacturing jobs in China and other countries without those labor laws? The remaining jobs in the US are salaried position where "8 hour workday" and "weekend" are often meaningless. Plus we're talking about a wealth tax in California. You can start a company in Nevada and still access the market of California just fine.

aesh2Xa1 6y ago
"Then who will purchase your cars?" Let them leave. We have a government all the more for ourselves. We need not purchase products built with the exploitation of cheap, and even forced, labor.
marakv2 6y ago
Greater profit. How else are you going to pay a ceo 10mm per year...
tchaffee 6y ago
They are not. In 2016 China produced about $4.566 trillion in manufactured goods. Coming in 2nd place, in 2016 the U.S produced about $3.602 trillion in manufactured goods.
- rubber_duck 6y ago
  He didn't say manufacturing output but jobs, a more relevant number for that argument would be total labor cost in the sector and it's change over time between two countries.
  - tchaffee 6y ago
    That's not such a relevant number because plenty of those US jobs went to automation, not to China. There are still over 12 million manufacturing jobs in the US. About 8% of all US jobs which is a significant chunk. Easily disapproving the wild exaggeration that "all of the manufacturing jobs are in China... ".
filoeleven 6y ago

nordsieck 6y ago

> Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left. Some didn't leave. There's a reason why Singapore has the highest concentration of millionaires in the world, and it's not because of their school system. I'm not saying that all will leave, or even that most will, but some will.

dragonwriter 6y ago
> There's a reason why Singapore has the highest concentration of millionaires in the world, and it's not because of their school system. No, it's because it's a city-state, and millionaires tend to be urban, so comparison with countries with lower urbanization is misleading. New York City (which has a population not much larger, so it's a community of roughly comparable scale that, like Singapore, is 100% urban) has a notably higher concentration of millionaires than Singapore does. (1 in ~8.4 compared to Singapore's 1 in ~20.)
- nordsieck 6y ago
  > No, it's because it's a city-state, and millionaires tend to be urban, so comparison with countries with lower urbanization is misleading. New York City (which has a population not much larger, so it's a community of roughly comparable scale that, like Singapore, is 100% urban) has a notably higher concentration of millionaires than Singapore does. (1 in ~8.4 compared to Singapore's 1 in ~20.) I'm not sure what your point is. Unless you're claiming that cities spontaneously generate millionaires? From what I can tell, NYC has lots of millionaires primarily because rich people like to live there, so rich and talented people move to NYC from all over the US. The same thing is true of Singapore, except that - as you so rightly point out - there is no "rest of Singapore" for them to come from. Instead, they come from the rest of the World, by necessity.
  - culturestate 6y ago
    > From what I can tell, NYC has lots of millionaires primarily because rich people like to live there, so rich and talented people move to NYC from all over the US. I couldn't find any data on this with a quick search, but my instinct is that NYC probably generates more millionaires than it acquires. You can move to the city straight out of college and become a millionaire in relatively short order if you land the right job; it's a much more circuitous path to get rich by starting, like, a construction company in rural Nebraska and then move to NYC. The same seems (broadly) true of other financial or tech capitals. It's easier to build wealth in cities than outside of them.

CryptoPunk 6y ago

>>Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left. The fact that are still super-rich people doesn't imply that such interventions did not have a negative on the number of people who are super-rich in the US. High taxes have a well-established negative effect on capital formation, and investment in-flows. This isn't some conspiracy theory promoted by the super-rich to manipulate you. I think you're giving the arguments made against high taxes a very shallow treatment.

romanoderoma 6y ago
> High taxes have a well-established negative effect on capital formation, and investment That's interesting because in absolute numbers countries with a very high taxation are among the first for number of millionaires. Japan is 3rd, UK is 4th, Germany is 5th, France is 6th, Italy is 7th Compared to the population, Switzerland and Honk Kong are 1st and 2nd In Switzerland taxes are usually low compared to the rest of Europe, but in Geneva they are 45.5%, the highest rate for Switzerland and yet is the city with the highest concentration of millionaires per square kilometer in the World, more than Monaco and SF. Millionaires in Switzerland are almost two times those of the US compared to the population (9.5k/100k vs 5k/100k) 4th is the Netherlands, 5th is Denmark and 7th is Sweden, three countries famous for their high tax rates but equally high social and economical wealth.
- CryptoPunk 6y ago
  >>That's interesting because in absolute numbers countries with a very high taxation are among the first for number of millionaires. >>Japan is 3rd, UK is 4th, Germany is 5th, France is 6th, Italy is 7th Nearly the entirety of the developed world has high taxes, and the developed world has the most wealthy individuals.
  - romanoderoma 6y ago
    It must mean that high taxes don't have a negative effect on capital formation and that "developed" is more about fairness and justice of the system and not about "how many more billionaires there would be if the system was less fair?"

beagle3 6y ago

But indeed corporations (which are "people") have moved en masse to Ireland. And New Jersey saw a significant exodus towards lower tax states among its richest. It's not empty threats - it's just that the cost of the taxes has to be higher than the cost of moving. For most people, the cost of relocating is higher than the taxes. For the richest people, this wealth tax might just tip the scales. Ted Arison and Eduardo Saverin are the most famous examples I'm aware of - it's mostly because laws were changed after they managed to move without being taxed. Do you think there are no more loopholes? Do you think these are the only cases?