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Hypothetically, let's suppose I wholly own a small business. Maybe it's a SaaS. Maybe it's a restaurant. Maybe it's a plumbing contracting company. Doesn't matt
by compumike 6y ago
Hypothetically, let's suppose I wholly own a small business. Maybe it's a SaaS. Maybe it's a restaurant. Maybe it's a plumbing contracting company. Doesn't matter.
Let's say the business generates $1M/year in free cash flows.
Give me a number: What's my net worth? How much wealth tax should I be asked to pay?
(With income tax it's relatively straightforward: you're taxing actual transfers of cash or cash-equivalents from account A to account B that happened in time period Y. If the societal goal is to achieve more progressive redistribution of wealth, isn't it much simpler to just modify the income tax brackets and rates?)
- handmodel 6y agoI see it as similar to the land value tax versus property tax. Property taxes (as I would argue) aren't ideal because it discourages people from making improvement to their land. It is good (both for the owner and society) if they improve it and it is bad (both for the owner and society) if they let it stay empty or rot. Similarly, capital gains taxes discourage people from building new companies and investing in new ideas. A wealth tax would, instead, discourage people from hoarding their money in investments that don't produce new value. I do think the implementation is difficult with privately owned businesses. I agree - it seems very difficult to do so but not impossible to do if we figure that the wealth tax would only be implemented for those individuals holding stakes in companies worth more than 10M (or whatever)
- gnicholas 6y agoYou make a good point — a tax like this would be a full-employment act for tax lawyers. I used to be one, and if a tax like this were enacted, there would be so much demand I might be conscripted by my former colleagues.