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Calif. Wealth Tax Proposal Likely Faces Constitutional Challenges

27 points by brewdad 6y ago

henriquez 6y ago
It’s also unethical. Taxing people based on how much money they have left over after paying all of their other taxes is just wrong, regardless of how much money the person has. As far as I know there’s no basis for this ever having been done in human history. Not to even mention California’s proposed plan to keep collecting taxes after the person flees the state. I can’t imagine this bill has a chance of doing anything but helping useless politicians pander to their disaffected political bases.
- vlovich123 6y ago
  > As far as I know there’s no basis for this ever having been done in human history Two seconds of googling. The Wikipedia article for progressive taxation[1] suggests that the Roman Republic had a form of wealth tax: > The tax rate under normal circumstances was 1% of property value, and could sometimes climb as high as 3% in situations such as war. These taxes were levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth Then we have the wealth tax Wikipedia article itself[2] that lists 8 instances in recent history of wealth taxes. Then you say: > Not to even mention California’s proposed plan to keep collecting taxes after the person flees the state How is this any different from how taxes are owed today? I'm pretty sure all back taxes you owe a state remain even if you move states. Otherwise you could just rack up a huge tax bill & move states to escape. Even federal US tax liabilities are applied on world wide income & has treaties with many countries to enforce these laws for expats. > It’s also unethical. Taxing people based on how much money they have left over after paying all of their other taxes is just wrong Aside from stating a personal tautology you haven't really elevated the discussion much & then everything else flowed from this premise rather than evaluating the argument on its merits. I'm sure there's a compelling argument against this that could be made against a wealth tax independent of constitutional issues, but you haven't made it. [1] https://en.wikipedia.org/wiki/Progressive_tax https://en.wikipedia.org/wiki/Progressive_tax [2] https://en.wikipedia.org/wiki/Wealth_tax https://en.wikipedia.org/wiki/Wealth_tax
  - haram_masala 6y ago
    The problem with a wealth tax is that it's essentially retroactive. Instead of taxing income and capital gains at the time they're accrued, you tax them later - long after the individuals who accrued them have had the chance to make rational decisions based on that tax rate. This seems inherently unfair to me, a form of bait and switch, especially combined with the intention to hunt down former California residents up to a decade after they've left the state (thereby further denying them any opportunity to make rational decisions).
    - vlovich123 6y ago
      How is it a bait and switch? Seems like that kind of framing would apply to the introduction of any new tax which seems immature to me. I do hope the 10 year thing takes into account how long you’ve been in the state and how much you earned within the state. Remember. You’re only getting taxed on the amount over >30mil in assets (first 30 million isn’t taxable). That’s quite a lot of money before a very small tax begins to be levied. I do hope there’s also allowances for income tied up in illiquid investments (eg private business investments). I would also worry about taxation on net worth that hasn’t been realized (eg private company that does a valuation that suddenly puts you over the 30 mil threshold). These seem like important nuances that could quickly torpedo any benefits.
      - sokoloff 6y ago
        What can look like a very small tax is not at all small when applied repeatedly (annually). As an example a popular “Just two cents” plan takes a third of the value of a taxed base in 20 years and by 35 years, the government has received over half.
        thoughtstheseus 6y ago
        Does your example assume the asset will grow in value? Wealth taxes get big as they compound, but that also shows the compounding value of assets.
- avmich 6y ago
  The idea is that all the money are earned in a society, so social equality is a common concern. People tried different approaches to control equality, and the proposal which currently looks like one of better ones is this. It's not about "how much money they have left". It's about "it's hard to effectively tax at the earning time, so taxation is applied to leftovers". > As far as I know there’s no basis for this ever having been done in human history. So wealth tax as a term exist for a purely theoretical concept? The goal is noble, of course, as always. With good intentions... It would be nice if a better mechanism for keeping society on somewhat equal footing would be offered instead.
  - fastball 6y ago
    What you're talking about sounds more like forced equity, which many people find immoral.
    - sokoloff 6y ago
      I find it undesirable from a purely practical standpoint. I want people working to improve the human condition. One way to encourage that is to reward people who meet the needs of other people, as evidenced by people paying them money for goods and services.
      - CuriouslyC 6y ago
        Unfortunately, often people give other people money for a lot of reasons other than meeting their needs. Creating a "need" that didn't exist only so you can sell a product that people think will make them happy but actually won't is the basis of modern capitalism.
        dantheman 6y ago
        Really it's the basis of modern capitalism? Please, tell me what things people are bamboozled to buy?
        6y ago
- paul_f 6y ago
  I don't agree with the tax, I also don't agree with this poster that this tax is going after the "leftovers". The primary intent of the wealth tax seems to be going after unrealized capital gains. Stock appreciation that would not normally be taxed until sold. Taxing this is not wrong as much as it is completely unworkable and so counterproductive.
  - belorn 6y ago
    The Swedish tax system allow both models and it up to the stock owner which type they choose (chosen when creating the "stock account" at the bank). You either pay income tax when a stock is sold, or you pay the same income tax on the value of the stocks based on a fixed predetermined estimate on how much stocks is expected to increase in value (based on the rate for the government debt and then added 1%). Each model has benefits and drawbacks for both the government and the tax paying citizen, and both works. Taxing wealth directly has the benefit that it gives the government a more even and predictable taxation each year, and the citizen benefit by gaining any additional profits that is above the rate for the government debt+1%. The downside is that the government may not get as much tax as it could as the yearly stock value increase tend to be a bit above that predetermined value, and citizens may loose out a bit more when there is a significant crash. The benefit of taxing only when people sell stocks is that the government get the whole income tax, and the citizen do not have to pay any tax if they don't have any profits. However it seems that most people are going with option 1 since people tend to expect that stocks will go up in value when they invest in stocks. Currently, that predetermined tax is (0.51+1)*0.3 or 0.453% per year of the total stock value.
    - paul_f 6y ago
      California is not proposing the "Swedish" system.
      - belorn 6y ago
        Correct, but what I am describing is a wealth tax system that goes after unrealized capital gains from stocks that does not depend on the stock being sold. It can tax the expected value increase rather than the actually value derived when a stock is sold, demonstrating a working method to tax the value of stock ownership rather than at the point of sales. It also demonstrate that people will volunteer to such system if it gives a statistically economic benefit to do so.
- Red_Leaves_Flyy 6y ago
  I staunchly disagree with the ethical qualms you've raised. When gauging the ethics of a choice one must weigh the harm against the several, independently and collectively. If that which is gained by the many is greater than the loss suffered by the individual or the few than it is not only ethical, it is essential to fuel a thriving society. Something that we collectively have neglected to do got decades.
  - todd8 6y ago
    Doesn't this reasoning lead to all sorts of problems? There are countless people around the world that would be helped by a few extra dollars each week. As long as you personally are living above a subsistence level by this reasoning you should be taxed to improve their lives. Or say, that two people that have lost their kidneys due to driving drunk and each having an accident, and that your kidneys are a good donor match. Should we take both your kidneys and give one to each of the drunk drivers? Only one person would suffer (too bad for you), but the two others would gain. Or imagine, your daughter going to elementary school with her new birthday present, a stuffed animal. Three classmates are envious and jealous, should their teacher throw the little stuffed animal in the trash, making three classmates happy at the expense of you daughter? Wouldn't it make sense by this reasoning for you to be forced to take a couple of homeless people as roommates? It would make their lives much better (even more so if you were forced to prepare meals for them), this only inconveniences you while benefiting your new roommates.
    - jdlshore 6y ago
      You are engaging in the slippery slope fallacy: specifically, you’re taking an existing proposal and exaggerating its possible consequences by ignoring the possibility of a middle ground.
      - ls612 6y ago
        What you call the slippery slope fallacy is really someone asking for a limiting principle on your argument. Responding like that strongly implies that there isn’t one.
- srtjstjsj 6y ago
  I'll worry about the ethics of taxing $30millionaires after reparations have been paid for slavery, Jim Crow, and housing covenants.
zxcvbn4038 6y ago
The state of New York is also known for pursuing high value individuals after they leave the state and trying to tax them. https://www.cnbc.com/2019/03/08/tax-collectors-chase-rich-new-yorkers-moving-to-low-tax-states.html https://www.cnbc.com/2019/03/08/tax-collectors-chase-rich-ne...
vmception 6y ago
paywall, details? curious about which constitutional aspects they look at
neilwilson 6y ago
When it comes to taxation, only the currency issuer (the Federal government) can really tax income and wealth denominated in its currency. Currency users, like states or counties within a currency union really can only tax the land and property within them. Everything else has a habit of moving to lower taxed areas. Other states will end up passing laws saying the Californian Wealth tax cannot be collected or enforced in their area. I'm surprised they aren't teeing that one up in Texas as we speak - given all that lovely IT business they could attract. Purity of tax theory is what ended up as Poll Tax riots in the UK. Eventually local taxation reverted to property as it tends to once pragmatism and reality reasserts itself. California could get what it needs using a volumetric hut tax - unless it fancies going independent and setting up its own currency.
- belorn 6y ago
  Where does a bank account or stock portfolio reside? Is it at the physical location of the banks server hall (assuming only a single server is representing the location of the account), or is it the location of the local representative bank where the customer is said to be located according to the bank? Is it maybe the central headquarter of the bank or maybe the location of the server for the bank online interface where the customer interacts with his account? Alternative, can it be the registered address of the customer, or maybe the actually location for where the customer physically resides. It seems reasonable that a argument can be made that property exist in one of those places rather than none. Maybe the Federal government should simple dictate where that is and then let local government handle the actually taxation.
  - neilwilson 6y ago
    It resides where the person resides. Otherwise the Gold on the face of the Reserve Bank of Australia balance sheet would belong to England. I very much doubt anybody would suggest that England can tax the Gold of Australia any more. We'd never hear the last of it from the Aussies for starters.
  - bwb 6y ago
    It is done where the person has a tax residence. The USA is one of only 3 countries to tax you no matter where you live. Which is really painful for Americans not living in the USA. They need to fix this... The rest of the world taxes you as part of a territorial system, ie, where you live and have tax residence.
bwb 6y ago
There are so many easier ways to do this, starting taxing dividends and other income progressively and at normal tax rates. I don't get why they are even trying this, it creates massive problems and is not a solution. As well as tax inheritance at 25% or progressively.
- deleted 6y ago
  [deleted]
- LinuxBender 6y ago
  I am moving to a state that specifically has no inheritance tax and no income tax. I suspect some others are as well.
- 0xfaded 6y ago
  A wealth tax directly targets wealth inequality. No other tax can do that. It is also extremely predictable, as wealth doesn't necessarily disappear when the economy has a downturn. You need a war to destroy wealth. Wealth lasts for generations, and you don't pay inheritance taxes on family connections or a top tier education. New taxes that make the accumulation of wealth more equal, i.e. progressive income taxes or capital gains as income taxes, will not erode the existing wealth disparity within our lifetimes. Just look at how the policies up until the 80s resulted in white Americans owning all the property, which subsequently appreciated due to monetary policy. If wealth inequality is a problem, which I believe it is, you should tax wealth because it directly reduces the gap in absolute terms.
  - bwb 6y ago
    I disagree, a wealth tax targets wealth, not inequality. Inequality is deeper, inequality should be targeted with things like free access to university and technical schools, policies that target housing prices to keep those lower or progressively tax homes with property taxes to reduce expensive homes, tax empty homes, fix health care so a base level is included as part of taxes for every citizen, expand childcare/school to age 3 months, pass paid vacation on a federal level of 4 weeks, bump minimum wage, pass an inheritance tax of 50% on anything more than 1 million, etc. Thinking a wealth tax fixes anything is crazy. Just look at all the case studies out of Europe. All it does is create more loopholes, reduce business investment, and cause capital to flee. Also, inequality in the right ratio is good. Now we just need to figure out where that ratio should be. I think the USA is obscene right now, but mostly because we have enough money to build a real working society and instead we've built a cage to fight to the death within.
CryptoPunk 6y ago
Do the proponents of these heavy tax burden schemes think the benefits of lower wealth inequality and higher extraction rates will outweigh the loss of incentive to work/invest, allocation efficiency and capital (from more capital flight and less capital influx)?
- jdhn 6y ago
  Yes, they really do.
  - CryptoPunk 6y ago
    Even the difference between 1 and 2% per capita GDP growth per year is the difference between per capita GDP growing 35% and 82% over 35 years. It's hard to imagine the benefits for the masses of an additional 47% in per capita productivity growth not outweighing the benefits of the higher tax rates on the rich.
exabrial 6y ago
What does the California government need this for? Their budget is insane already. Seems like cleaning house is the first thing you should do.
- jfengel 6y ago
  "Insane" how? Its budget is $5,430 per person, 33rd in the nation. The highest is North Dakota at nearly $20k per person. California falls between Nebraska ($5,024) and South Dakota ($5,575)[1]. It's big because it's a big state. If it were a country, it would be in the top 50 in the world by population, and 5th by GDP. It's got issues of its own, like any other large organization, but there's nothing particularly out of line about its budget. They're doing this not because the budget is in deficit (it was going to be in surplus this year, before the pandemic, and had been in surplus for a while) but because it wants to shift the burden of its budget to those with wealth (and away from the middle class, especially the lower-middle-class). It may or may not be a good way to do that, but it's not because it's desperate for money. Quite the reverse: it's got so much money that it gets to choose how it funds itself. [1] https://en.wikipedia.org/wiki/List_of_U.S._state_budgets https://en.wikipedia.org/wiki/List_of_U.S._state_budgets
  - ISO-morphism 6y ago
    Fun fact, North Dakota is also the only state in the US to have a state-owned bank[1]. Also throw in a grain elevator/flour mill for good measure[2]. [1] https://en.wikipedia.org/wiki/Bank_of_North_Dakota https://en.wikipedia.org/wiki/Bank_of_North_Dakota [2] https://en.wikipedia.org/wiki/North_Dakota_Mill_and_Elevator https://en.wikipedia.org/wiki/North_Dakota_Mill_and_Elevator
todd8 6y ago
Four of the twelve the homes on my little street here in Texas are owned by people that used to have substantial businesses in California. They relocated to Texas to escape California bringing hundreds of jobs with them.

27 points by brewdad 6y ago

It’s also unethical. Taxing people based on how much money they have left over after paying all of their other taxes is just wrong, regardless of how much money the person has. As far as I know there’s no basis for this ever having been done in human history. Not to even mention California’s proposed plan to keep collecting taxes after the person flees the state. I can’t imagine this bill has a chance of doing anything but helping useless politicians pander to their disaffected political bases.

vlovich123 6y ago
> As far as I know there’s no basis for this ever having been done in human history Two seconds of googling. The Wikipedia article for progressive taxation[1] suggests that the Roman Republic had a form of wealth tax: > The tax rate under normal circumstances was 1% of property value, and could sometimes climb as high as 3% in situations such as war. These taxes were levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth Then we have the wealth tax Wikipedia article itself[2] that lists 8 instances in recent history of wealth taxes. Then you say: > Not to even mention California’s proposed plan to keep collecting taxes after the person flees the state How is this any different from how taxes are owed today? I'm pretty sure all back taxes you owe a state remain even if you move states. Otherwise you could just rack up a huge tax bill & move states to escape. Even federal US tax liabilities are applied on world wide income & has treaties with many countries to enforce these laws for expats. > It’s also unethical. Taxing people based on how much money they have left over after paying all of their other taxes is just wrong Aside from stating a personal tautology you haven't really elevated the discussion much & then everything else flowed from this premise rather than evaluating the argument on its merits. I'm sure there's a compelling argument against this that could be made against a wealth tax independent of constitutional issues, but you haven't made it. [1] https://en.wikipedia.org/wiki/Progressive_tax https://en.wikipedia.org/wiki/Progressive_tax [2] https://en.wikipedia.org/wiki/Wealth_tax https://en.wikipedia.org/wiki/Wealth_tax
- haram_masala 6y ago
  The problem with a wealth tax is that it's essentially retroactive. Instead of taxing income and capital gains at the time they're accrued, you tax them later - long after the individuals who accrued them have had the chance to make rational decisions based on that tax rate. This seems inherently unfair to me, a form of bait and switch, especially combined with the intention to hunt down former California residents up to a decade after they've left the state (thereby further denying them any opportunity to make rational decisions).
  - vlovich123 6y ago
    How is it a bait and switch? Seems like that kind of framing would apply to the introduction of any new tax which seems immature to me. I do hope the 10 year thing takes into account how long you’ve been in the state and how much you earned within the state. Remember. You’re only getting taxed on the amount over >30mil in assets (first 30 million isn’t taxable). That’s quite a lot of money before a very small tax begins to be levied. I do hope there’s also allowances for income tied up in illiquid investments (eg private business investments). I would also worry about taxation on net worth that hasn’t been realized (eg private company that does a valuation that suddenly puts you over the 30 mil threshold). These seem like important nuances that could quickly torpedo any benefits.
    - sokoloff 6y ago
      What can look like a very small tax is not at all small when applied repeatedly (annually). As an example a popular “Just two cents” plan takes a third of the value of a taxed base in 20 years and by 35 years, the government has received over half.
      - thoughtstheseus 6y ago
        Does your example assume the asset will grow in value? Wealth taxes get big as they compound, but that also shows the compounding value of assets.
avmich 6y ago
The idea is that all the money are earned in a society, so social equality is a common concern. People tried different approaches to control equality, and the proposal which currently looks like one of better ones is this. It's not about "how much money they have left". It's about "it's hard to effectively tax at the earning time, so taxation is applied to leftovers". > As far as I know there’s no basis for this ever having been done in human history. So wealth tax as a term exist for a purely theoretical concept? The goal is noble, of course, as always. With good intentions... It would be nice if a better mechanism for keeping society on somewhat equal footing would be offered instead.
- fastball 6y ago
  What you're talking about sounds more like forced equity, which many people find immoral.
  - sokoloff 6y ago
    I find it undesirable from a purely practical standpoint. I want people working to improve the human condition. One way to encourage that is to reward people who meet the needs of other people, as evidenced by people paying them money for goods and services.
    - CuriouslyC 6y ago
      Unfortunately, often people give other people money for a lot of reasons other than meeting their needs. Creating a "need" that didn't exist only so you can sell a product that people think will make them happy but actually won't is the basis of modern capitalism.
      - dantheman 6y ago
        Really it's the basis of modern capitalism? Please, tell me what things people are bamboozled to buy?
        6y ago
paul_f 6y ago
I don't agree with the tax, I also don't agree with this poster that this tax is going after the "leftovers". The primary intent of the wealth tax seems to be going after unrealized capital gains. Stock appreciation that would not normally be taxed until sold. Taxing this is not wrong as much as it is completely unworkable and so counterproductive.
- belorn 6y ago
  The Swedish tax system allow both models and it up to the stock owner which type they choose (chosen when creating the "stock account" at the bank). You either pay income tax when a stock is sold, or you pay the same income tax on the value of the stocks based on a fixed predetermined estimate on how much stocks is expected to increase in value (based on the rate for the government debt and then added 1%). Each model has benefits and drawbacks for both the government and the tax paying citizen, and both works. Taxing wealth directly has the benefit that it gives the government a more even and predictable taxation each year, and the citizen benefit by gaining any additional profits that is above the rate for the government debt+1%. The downside is that the government may not get as much tax as it could as the yearly stock value increase tend to be a bit above that predetermined value, and citizens may loose out a bit more when there is a significant crash. The benefit of taxing only when people sell stocks is that the government get the whole income tax, and the citizen do not have to pay any tax if they don't have any profits. However it seems that most people are going with option 1 since people tend to expect that stocks will go up in value when they invest in stocks. Currently, that predetermined tax is (0.51+1)*0.3 or 0.453% per year of the total stock value.
  - paul_f 6y ago
    California is not proposing the "Swedish" system.
    - belorn 6y ago
      Correct, but what I am describing is a wealth tax system that goes after unrealized capital gains from stocks that does not depend on the stock being sold. It can tax the expected value increase rather than the actually value derived when a stock is sold, demonstrating a working method to tax the value of stock ownership rather than at the point of sales. It also demonstrate that people will volunteer to such system if it gives a statistically economic benefit to do so.
Red_Leaves_Flyy 6y ago
I staunchly disagree with the ethical qualms you've raised. When gauging the ethics of a choice one must weigh the harm against the several, independently and collectively. If that which is gained by the many is greater than the loss suffered by the individual or the few than it is not only ethical, it is essential to fuel a thriving society. Something that we collectively have neglected to do got decades.
- todd8 6y ago
  Doesn't this reasoning lead to all sorts of problems? There are countless people around the world that would be helped by a few extra dollars each week. As long as you personally are living above a subsistence level by this reasoning you should be taxed to improve their lives. Or say, that two people that have lost their kidneys due to driving drunk and each having an accident, and that your kidneys are a good donor match. Should we take both your kidneys and give one to each of the drunk drivers? Only one person would suffer (too bad for you), but the two others would gain. Or imagine, your daughter going to elementary school with her new birthday present, a stuffed animal. Three classmates are envious and jealous, should their teacher throw the little stuffed animal in the trash, making three classmates happy at the expense of you daughter? Wouldn't it make sense by this reasoning for you to be forced to take a couple of homeless people as roommates? It would make their lives much better (even more so if you were forced to prepare meals for them), this only inconveniences you while benefiting your new roommates.
  - jdlshore 6y ago
    You are engaging in the slippery slope fallacy: specifically, you’re taking an existing proposal and exaggerating its possible consequences by ignoring the possibility of a middle ground.
    - ls612 6y ago
      What you call the slippery slope fallacy is really someone asking for a limiting principle on your argument. Responding like that strongly implies that there isn’t one.
srtjstjsj 6y ago
I'll worry about the ethics of taxing $30millionaires after reparations have been paid for slavery, Jim Crow, and housing covenants.

zxcvbn4038 6y ago

The state of New York is also known for pursuing high value individuals after they leave the state and trying to tax them. https://www.cnbc.com/2019/03/08/tax-collectors-chase-rich-new-yorkers-moving-to-low-tax-states.html https://www.cnbc.com/2019/03/08/tax-collectors-chase-rich-ne...

vmception 6y ago

paywall, details? curious about which constitutional aspects they look at

neilwilson 6y ago

When it comes to taxation, only the currency issuer (the Federal government) can really tax income and wealth denominated in its currency. Currency users, like states or counties within a currency union really can only tax the land and property within them. Everything else has a habit of moving to lower taxed areas. Other states will end up passing laws saying the Californian Wealth tax cannot be collected or enforced in their area. I'm surprised they aren't teeing that one up in Texas as we speak - given all that lovely IT business they could attract. Purity of tax theory is what ended up as Poll Tax riots in the UK. Eventually local taxation reverted to property as it tends to once pragmatism and reality reasserts itself. California could get what it needs using a volumetric hut tax - unless it fancies going independent and setting up its own currency.

belorn 6y ago
Where does a bank account or stock portfolio reside? Is it at the physical location of the banks server hall (assuming only a single server is representing the location of the account), or is it the location of the local representative bank where the customer is said to be located according to the bank? Is it maybe the central headquarter of the bank or maybe the location of the server for the bank online interface where the customer interacts with his account? Alternative, can it be the registered address of the customer, or maybe the actually location for where the customer physically resides. It seems reasonable that a argument can be made that property exist in one of those places rather than none. Maybe the Federal government should simple dictate where that is and then let local government handle the actually taxation.
- neilwilson 6y ago
  It resides where the person resides. Otherwise the Gold on the face of the Reserve Bank of Australia balance sheet would belong to England. I very much doubt anybody would suggest that England can tax the Gold of Australia any more. We'd never hear the last of it from the Aussies for starters.
- bwb 6y ago
  It is done where the person has a tax residence. The USA is one of only 3 countries to tax you no matter where you live. Which is really painful for Americans not living in the USA. They need to fix this... The rest of the world taxes you as part of a territorial system, ie, where you live and have tax residence.

bwb 6y ago

There are so many easier ways to do this, starting taxing dividends and other income progressively and at normal tax rates. I don't get why they are even trying this, it creates massive problems and is not a solution. As well as tax inheritance at 25% or progressively.

deleted 6y ago
[deleted]
LinuxBender 6y ago
I am moving to a state that specifically has no inheritance tax and no income tax. I suspect some others are as well.
0xfaded 6y ago
A wealth tax directly targets wealth inequality. No other tax can do that. It is also extremely predictable, as wealth doesn't necessarily disappear when the economy has a downturn. You need a war to destroy wealth. Wealth lasts for generations, and you don't pay inheritance taxes on family connections or a top tier education. New taxes that make the accumulation of wealth more equal, i.e. progressive income taxes or capital gains as income taxes, will not erode the existing wealth disparity within our lifetimes. Just look at how the policies up until the 80s resulted in white Americans owning all the property, which subsequently appreciated due to monetary policy. If wealth inequality is a problem, which I believe it is, you should tax wealth because it directly reduces the gap in absolute terms.
- bwb 6y ago
  I disagree, a wealth tax targets wealth, not inequality. Inequality is deeper, inequality should be targeted with things like free access to university and technical schools, policies that target housing prices to keep those lower or progressively tax homes with property taxes to reduce expensive homes, tax empty homes, fix health care so a base level is included as part of taxes for every citizen, expand childcare/school to age 3 months, pass paid vacation on a federal level of 4 weeks, bump minimum wage, pass an inheritance tax of 50% on anything more than 1 million, etc. Thinking a wealth tax fixes anything is crazy. Just look at all the case studies out of Europe. All it does is create more loopholes, reduce business investment, and cause capital to flee. Also, inequality in the right ratio is good. Now we just need to figure out where that ratio should be. I think the USA is obscene right now, but mostly because we have enough money to build a real working society and instead we've built a cage to fight to the death within.

CryptoPunk 6y ago

Do the proponents of these heavy tax burden schemes think the benefits of lower wealth inequality and higher extraction rates will outweigh the loss of incentive to work/invest, allocation efficiency and capital (from more capital flight and less capital influx)?

jdhn 6y ago
Yes, they really do.
- CryptoPunk 6y ago
  Even the difference between 1 and 2% per capita GDP growth per year is the difference between per capita GDP growing 35% and 82% over 35 years. It's hard to imagine the benefits for the masses of an additional 47% in per capita productivity growth not outweighing the benefits of the higher tax rates on the rich.

exabrial 6y ago

What does the California government need this for? Their budget is insane already. Seems like cleaning house is the first thing you should do.

jfengel 6y ago
"Insane" how? Its budget is $5,430 per person, 33rd in the nation. The highest is North Dakota at nearly $20k per person. California falls between Nebraska ($5,024) and South Dakota ($5,575)[1]. It's big because it's a big state. If it were a country, it would be in the top 50 in the world by population, and 5th by GDP. It's got issues of its own, like any other large organization, but there's nothing particularly out of line about its budget. They're doing this not because the budget is in deficit (it was going to be in surplus this year, before the pandemic, and had been in surplus for a while) but because it wants to shift the burden of its budget to those with wealth (and away from the middle class, especially the lower-middle-class). It may or may not be a good way to do that, but it's not because it's desperate for money. Quite the reverse: it's got so much money that it gets to choose how it funds itself. [1] https://en.wikipedia.org/wiki/List_of_U.S._state_budgets https://en.wikipedia.org/wiki/List_of_U.S._state_budgets
- ISO-morphism 6y ago
  Fun fact, North Dakota is also the only state in the US to have a state-owned bank[1]. Also throw in a grain elevator/flour mill for good measure[2]. [1] https://en.wikipedia.org/wiki/Bank_of_North_Dakota https://en.wikipedia.org/wiki/Bank_of_North_Dakota [2] https://en.wikipedia.org/wiki/North_Dakota_Mill_and_Elevator https://en.wikipedia.org/wiki/North_Dakota_Mill_and_Elevator

todd8 6y ago

Four of the twelve the homes on my little street here in Texas are owned by people that used to have substantial businesses in California. They relocated to Texas to escape California bringing hundreds of jobs with them.