6 ms·

Why? (I mostly agree but it's not a strong opinion)

by RivieraKid 6y ago

muststopmyths 6y ago
My guess: because they hope to be wealthy some day.
- throwaways885 6y ago
  Doesn't everyone? Plus, there's other reasons to be skeptical of wealth taxes, capital flight is a real thing.
  - pmiller2 6y ago
    That's why you pair them with capital controls, to keep that from happening. This, unfortunately, requires significant cooperation from the international community, and ought to be done before any wealth tax is imposed. BTW, have you seen how expensive it is for high net worth individuals to renounce US citizenship?
  - marricks 6y ago
    Isn't that just another myth peddled by wealthy groups? This was a pretty good study and didn't find that effect[1]. Just on the face of it, sure if you're wealthier you have greater ability to move but that also means you probably like where you are because you chose to be there. Most of my high school friends dispersed around the country solely for job opportunities, not because they wanted to be somewhere. [1] https://minnesota.publicradio.org/features/2011/02/documents/millionaire-migration.pdf https://minnesota.publicradio.org/features/2011/02/documents... > The New Jersey millionaire tax experiment offers a potent testing ground, given the magnitude of the policy change and the relative ease of relocating to a different state tax regime without leaving the New York or Philadelphia metropolitan areas. Using a difference-in-difference estimator, we find minimal effect of the new tax on the migration of millionaires.
  - beardedetim 6y ago
    > Doesn't everyone? God I hope not. How empty would we all be if we all wanted to have more money than the next guy.
  - mcphage 6y ago
    > capital flight is a real thing Yep, that's why all of the rich people have left New York and California.
    - throwaways885 6y ago
      You think rich people are paying those kind of taxes? Why wouldn't they leave if this wealth tax were suddenly imposed upon them?
      - mcphage 6y ago
        > You think rich people are paying those kind of taxes? Judging by the amount of wealth in New York and California: obviously yes. > Why wouldn't they leave if this wealth tax were suddenly imposed upon them? Because they want what the taxes get them.
  - Spare_account 6y ago
    >capital flight is a real thing. Can anyone provide some examples of it happening in an economy like ours?
    - topicseed 6y ago
      Not sure if "France" is an "economy like yours" but they have definitely suffered from capital flight following a wealth tax hike[0][1]. [0] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1268381 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1268381 [1] https://www.forbes.com/sites/jonhartley/2015/02/02/frances-75-supertax-failure-a-blow-to-pikettys-economics/ https://www.forbes.com/sites/jonhartley/2015/02/02/frances-7...
- mikepurvis 6y ago
  A famous formulation of that is: "John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."
  - newfriend 6y ago
    So tired of reading this quote every time taxes come up like it's some profound statement. I see it so often to ridicule "silly poor people voting for lower taxes". It's possible for someone to think that it's unfair for some people to pay a huge amount of taxes unfairly, without they themselves thinking "one day I'll be rich".
    - mikepurvis 6y ago
      I think it's more than just "one day I'll be rich"; it's part of the mythos of where wealth comes from. If your starting point is the American Dream, that wealth comes purely from a combination of ingenuity, luck, and hard work, either from the individual or one or more previous generations, then it's easy to see being asked to pay away a share of it as unfair. But if you see wealth as something that arises at least in part from the opportunities afforded by the structures and services within a society, then it's reasonable to expect that the society is owed back a portion of it, in part to maintain those services for the benefit of others coming later. And fairness aside, there's the purely pragmatic concern that multi-generational wealth concentration is bad for almost everything— bad for democracy, bad for fairness in media, bad for civil unrest, etc etc. Is taxing wealth an effective way to manage this? Maybe, maybe not. But anyone who wants to critique it should probably be willing to support _some_ plan for controlling wealth inequality over the long term.
      - davrosthedalek 6y ago
        It's a fallacy to believe that making the rich less rich makes the poor less poor. There are a lot of things in between which must go right.
  - coliveira 6y ago
- BitwiseFool 6y ago
  That's very reductive. You should know that the Federal Income Tax that was first collected in 1913 had a top bracket of 7%. Today, the minimum bracket is 10% and the average middle class citizen pays around 12-18% of their income to the IRS. So sure, the wealth tax would only be on "the rich" when it first starts out but I guarantee you the middle class will be hit by it eventually.
  - mewmewblobcat 6y ago
    Most people are already hit by "wealth taxes", except they are regressive - it's called "property tax".
    - deleted 6y ago
      [deleted]
    - mikepurvis 6y ago
      Surely property tax is trivially easy to justify? It usually is collected by the municipality and pays for things that have ongoing operating costs— roads, fire department, schools, etc. How else should those things be paid for?
      - davrosthedalek 6y ago
        From the other taxes? Germany has vanishing property taxes compared to the US. Better roads and schools, no question.
        mikepurvis 6y ago
        I don't know how it works in Germany, but here in Canada, one of the big issues with that is that income taxes are only collected at the provincial and federal level. Now, a chunk of that money gets sent down to lower levels of government— Waterloo region where I live recently received $600M from upper levels of government for a light rail system that is now built and operating, and the current budget shows 27% of revenue coming from "provincial and federal grants". The thing is, that money which comes from the upper levels is extremely subject to the whims of those governments; it can fluctuate wildly depending who comes into power and what their priorities are. So without some guarantees around it, I can understand the municipalities wanting a stable source of income over which they have some agency, and out of which they can reap immediate benefit from growing the local economy. Anyway, I'd love to hear from someone in Germany how this is resolved there; but I'd assume there'd need to be some pretty structured, long-term agreements around minimum amounts, percentages of new growth, and so on.
- Dylan16807 6y ago
  So what? I hope to be wealthy and not pull up the ladder behind me.
- JamesBarney 6y ago
  There are other reasons to oppose them like they historically bring in very little money, they're a pain in the ass to administer, capital flight. Some evidence for this are parts of Europe is abandoning their wealth taxes. If you want to raise money or reduce inequality there are better ways to do it. Income tax, capital gains, inheritance, etc...
  - jahaja 6y ago
    > Some evidence for this are parts of Europe is abandoning their wealth taxes. That's not evidence. We have right-wing parties in Europe too. They introduce right-wing policies when they have power, such as the above.
    - JamesBarney 6y ago
      Do you think that successful policies are as likely to be rolled back as unsuccessful ones?
      - jahaja 6y ago
        What kind of strange reasoning is that? Policies are enacted for multiple reasons, very often without any concrete evidence that it's better or worse.
- coliveira 6y ago
  Also called "American dream".
- OminousWeapons 6y ago
  Equally as valid to say you are in support because you believe you will derive additional benefits financed by taxes you will never have to pay.
pfortuny 6y ago
Among other things I guess “wealthy” is an easily movable goal post...
- throwaway2048 6y ago
  This seems to be a classic problem in American political discourse, people immediately discount solutions for very serious problems that exist right now, due to (often extremely shaky) hypotheticals that might some day come to pass (usually with a massive heaping helping of slippery slope fallacy).
  - pfortuny 6y ago
    Well, as long as there is no definition of “wealth”, there is a slippery slope. Is having saved 200.000$ in 30 years (not so bonkers) being rich?
  - nemo44x 6y ago
    I disagree. We have evidence of this happening repeatedly. Income tax being the prime example. I believe the problem is this: we hardly ever describe the end state. We don't define a metric that we look to achieve and then what we change about the policy when we've achieved it. So what happens is bloated bureaucracies become established and fight for self preservation, even if the mission they were on is complete.
vmception 6y ago
Hard to value creating expensive compliance and easy game-ability. Not easily convertible to cash. Doesn't fix the government's spending pattern or plug its budget hole unless it resorts to full on expropriation. Not competitive.
- yboris 6y ago
  I heard an idea: "you must declare all your assets, if an asset is found that you're not claiming, it becomes government property". So if you try to game the system by not claiming a vacation home, it just becomes public property. Thoughts?
  - vmception 6y ago
    still very gameable. The LLC with the innocuous name of 123 Main St LLC which is the owner of the property at 123 Main St definitely has an owner, and it might not be a tax resident because the LLC is owned by 123 Main St Limited in the Cayman Islands and the ultimate beneficial owner, who is still unknown at this point, may not be an American to begin with. So just applying heuristics to "hey that house doesn't appear in our tax records get it boys" would create more problems than you think. And this also circles back to "not competitive". If your country has problems with expropriation people will stop coming there, and others will leave. But also note, the US constitution does protect against expropriation in the 5th amendment. When rich people start being the subject of civil asset forfeiture the 5th amendment will suddenly start applying again.
- bilbo0s 6y ago
  1 and 2 are easily surmountable. I wouldn't even call those challenges. (We've had property taxes for decades.) 3 and 4 are the real problems with a wealth tax. The fundamental issue is that the government spends too much money. The politicians and the voters who support them refuse to support cuts in the magnitudes necessary to bring that situation back in hand. Many don't even believe it is a problem. On top of all that, the programs they refuse to cut, at every governmental level, are exactly the programs that suck up the most money. Medicare, Military, Police and Fire, on and on. 99.999% of all voters are like the family in the financial advisor's office who are willing to cut the trips to Starbuck's or go to a cheaper gym. So they feel they are being responsible. But they tell the financial advisor that the kids' private school tuition and the $50,000 cars they drive are not up for discussion. (Lord help you if you have the temerity to bring up the biggest issue of all, the $500,000 house they live in. You better have you kevlar on for that discussion.) What can you do with people like that?
bdangubic 6y ago
If my wealth comes from owning a percentage of a company (say I own 30% of AMZN) what is the way to tax me other than taking my shares, i.e. the Gov would take certain percentage of my shares? And if we go that route how many years would it go by before Gov owned majority of shares of most companies? Lots of people scream that we should tax the wealthy but I do not follow how you tax someone whose wealth comes from large ownership of a big company...?
- kalenx 6y ago
  I don't see how you came to your conclusion. Gov would tax you as they do now (including when you receive shares for instance), by asking you money. It is up to you to find it. If your assets are illiquid, then it is your problem not the government's one -- and in some cases it can indeed be quite unfair, e.g. for some startup employees.
- mattnewton 6y ago
  Simple, it’s progressive, so if you are very wealthy and own 30% of the company you might need to sell 5% to pay off wealth taxes over a few years, and you sell them to people or institutions, with less wealth (and therefore less wealth taxes due). It wouldn’t end up with the government owning the shares, it would end up with people at a tax advantage relative to you owning the shares. Whether or not that is a good idea, I don’t know.
- TheDong 6y ago
  Let's look at jeff bezos for example. He sells over a billion dollars worth of amazon stock each year [0] (those numbers have increased slightly since then actually). Fine, he pays some of that to the government, and maybe sells slightly more. I don't see the problem. If, in fact, your wealth only comes from ownership in a company and you have no other source of wealth, then yes you would be encourages to sell your shares to pay the wealth tax. I don't see why this is a problem. That's kinda the point of a wealth tax, that yes you do get taxed on your wealth. [0]: https://www.reuters.com/article/us-space-bezos/bezos-is-selling-1-billion-of-amazon-stock-a-year-to-fund-rocket-venture-idUSKBN1772ZQ https://www.reuters.com/article/us-space-bezos/bezos-is-sell...
AnimalMuppet 6y ago
I'm not the one you're asking. But here's my take: To some degree, wealth taxes break down the idea of private property ownership. "Your right of ownership is secured by law, but if you own too much, we'll take some of it away." I know that's not the way it's sold. But that is one aspect of the reality of it. I am in favor of the continued existence of private property rights, and for that reason I don't like a wealth tax. Also, such things tend to grow with time. You're going to tax those with more than a billion dollars? Seems OK, no relevance to me, and those people can afford it. You need more money this year, and you're going to tax those with more than 10 million? Well, I don't have that, either, but it's getting closer. Need still more money, and so you're moving it to a million? I might, by then, especially if inflation kicks back up. On the other hand, you could make a reasonable case that the existence of a wealth disparity of the magnitude that exists today is a threat to our society, especially if it can be inherited. So I lean against a wealth tax, but I can also see reasons for it...
fossuser 6y ago
For me it comes down to a few things. - I think wealth can be created and isn't always a zero sum transfer - I think we want to incentivize wealth creation - I think economic growth constrained by protection for human rights and environmental destruction is the best way to improve the quality of life for the most people the fastest. - I think wealth taxes disincentivize a lot of these things with knock on effects (forcing people to liquidate their company equity, etc.). It's also repeatedly taxing the same money every year eventually down to whatever the cap is. I'd rather set taxes/caps at generational wealth transfer if you're going to try and incentivize something - might as well go after dynastic wealth and the children that benefit from it without creating anything. I think focusing on housing and land use/zoning would also directly benefit more people by fixing existing perverse incentives. PG writes about some of this in essays, Tyler Cowen's book Stubborn Attachments was also interesting on the growth aspect (though wealth taxes aren't specifically mentioned). Why do we think wealth will be better allocated by a government? This money is largely already taxed either via capital gains or income. I'd suspect a lot of our problems are problems of incentives and competing priorities, not of available cash flow for government programs. That's my take anyway, I suspect a 'hate the rich' motivated reasoning position pushing the idea of a wealth tax more than any serious thinking about incentives and what it might do. It seems political. (I am nowhere near the level where the proposed tax would start and probably never will be.)
mac01021 6y ago
I don't have a super-well formed opinion about this but I think a wealth tax has some issues that don't get enough attention. Like that the market value of an asset can fluctuate wildly and become untethered from the actual rational value of the asset. So imagine you're Bezos or Musk and you're not trying to be super rich per se but just trying to build a company according to your vision and so you have a bunch of equity in the company (so that you can control it) but no matter how loudly you proclaim that the market is overvaluing your stock the price keeps going up and now you have to sell lots of shares in order to pay the wealth tax assessed against your equity and you don't have a controlling vote anymore and your vision for your company just dies. And maybe the hordes of people who think no single person should have a controlling share of a billion-dollar company are right - I don't know. But I'm pretty sure a large fraction of people who build companies (like Bezos or Musk) are doing it to build an enterprise, and not for the cash. Otherwise they'd just stop and have fun with their private jets at a certain point. So if a wealth tax were not going to let them keep control of their enterprise beyond the first decade, they probably would opt not to waste their time building it at all. And maybe that's fine, but I'm not sure what society looks like in a world where people don't want to build companies.
- nine_k 6y ago
  There is a ton of examples of societies where people don't want to build enterprises. Medieval Europe, where guild and social strata regulations prevented any large enterprise, except maybe large merchant operations. Sime of the poorer modern-day African countries, where social norms prescribe that any fortune has to be divided with the extended family, so concentration of assets to keep building something large is hard. I frankly think that the American model of free enterprise with reasonably few restrictions made most to improve the well-being of its population.
- fossuser 6y ago
  I think a wealth tax is a bad idea (as described in my comment above), but you can structure equity so that you retain control even without a large holding of shares (see: Palantir, Facebook). Arguably a wealth tax would create an incentive for everyone to do this which I would argue is probably bad since then the company controllers have less skin in the game. Generally I think a wealth tax creates a ton of these perverse incentives with little true upside.

Why? (I mostly agree but it's not a strong opinion)

muststopmyths 6y ago

My guess: because they hope to be wealthy some day.

throwaways885 6y ago
Doesn't everyone? Plus, there's other reasons to be skeptical of wealth taxes, capital flight is a real thing.
- pmiller2 6y ago
  That's why you pair them with capital controls, to keep that from happening. This, unfortunately, requires significant cooperation from the international community, and ought to be done before any wealth tax is imposed. BTW, have you seen how expensive it is for high net worth individuals to renounce US citizenship?
- marricks 6y ago
  Isn't that just another myth peddled by wealthy groups? This was a pretty good study and didn't find that effect[1]. Just on the face of it, sure if you're wealthier you have greater ability to move but that also means you probably like where you are because you chose to be there. Most of my high school friends dispersed around the country solely for job opportunities, not because they wanted to be somewhere. [1] https://minnesota.publicradio.org/features/2011/02/documents/millionaire-migration.pdf https://minnesota.publicradio.org/features/2011/02/documents... > The New Jersey millionaire tax experiment offers a potent testing ground, given the magnitude of the policy change and the relative ease of relocating to a different state tax regime without leaving the New York or Philadelphia metropolitan areas. Using a difference-in-difference estimator, we find minimal effect of the new tax on the migration of millionaires.
- beardedetim 6y ago
  > Doesn't everyone? God I hope not. How empty would we all be if we all wanted to have more money than the next guy.
- mcphage 6y ago
  > capital flight is a real thing Yep, that's why all of the rich people have left New York and California.
  - throwaways885 6y ago
    You think rich people are paying those kind of taxes? Why wouldn't they leave if this wealth tax were suddenly imposed upon them?
    - mcphage 6y ago
      > You think rich people are paying those kind of taxes? Judging by the amount of wealth in New York and California: obviously yes. > Why wouldn't they leave if this wealth tax were suddenly imposed upon them? Because they want what the taxes get them.
- Spare_account 6y ago
  >capital flight is a real thing. Can anyone provide some examples of it happening in an economy like ours?
  - topicseed 6y ago
    Not sure if "France" is an "economy like yours" but they have definitely suffered from capital flight following a wealth tax hike[0][1]. [0] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1268381 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1268381 [1] https://www.forbes.com/sites/jonhartley/2015/02/02/frances-75-supertax-failure-a-blow-to-pikettys-economics/ https://www.forbes.com/sites/jonhartley/2015/02/02/frances-7...
mikepurvis 6y ago
A famous formulation of that is: "John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."
- newfriend 6y ago
  So tired of reading this quote every time taxes come up like it's some profound statement. I see it so often to ridicule "silly poor people voting for lower taxes". It's possible for someone to think that it's unfair for some people to pay a huge amount of taxes unfairly, without they themselves thinking "one day I'll be rich".
  - mikepurvis 6y ago
    I think it's more than just "one day I'll be rich"; it's part of the mythos of where wealth comes from. If your starting point is the American Dream, that wealth comes purely from a combination of ingenuity, luck, and hard work, either from the individual or one or more previous generations, then it's easy to see being asked to pay away a share of it as unfair. But if you see wealth as something that arises at least in part from the opportunities afforded by the structures and services within a society, then it's reasonable to expect that the society is owed back a portion of it, in part to maintain those services for the benefit of others coming later. And fairness aside, there's the purely pragmatic concern that multi-generational wealth concentration is bad for almost everything— bad for democracy, bad for fairness in media, bad for civil unrest, etc etc. Is taxing wealth an effective way to manage this? Maybe, maybe not. But anyone who wants to critique it should probably be willing to support _some_ plan for controlling wealth inequality over the long term.
    - davrosthedalek 6y ago
      It's a fallacy to believe that making the rich less rich makes the poor less poor. There are a lot of things in between which must go right.
- coliveira 6y ago
BitwiseFool 6y ago
That's very reductive. You should know that the Federal Income Tax that was first collected in 1913 had a top bracket of 7%. Today, the minimum bracket is 10% and the average middle class citizen pays around 12-18% of their income to the IRS. So sure, the wealth tax would only be on "the rich" when it first starts out but I guarantee you the middle class will be hit by it eventually.
- mewmewblobcat 6y ago
  Most people are already hit by "wealth taxes", except they are regressive - it's called "property tax".
  - deleted 6y ago
    [deleted]
  - mikepurvis 6y ago
    Surely property tax is trivially easy to justify? It usually is collected by the municipality and pays for things that have ongoing operating costs— roads, fire department, schools, etc. How else should those things be paid for?
    - davrosthedalek 6y ago
      From the other taxes? Germany has vanishing property taxes compared to the US. Better roads and schools, no question.
      - mikepurvis 6y ago
        I don't know how it works in Germany, but here in Canada, one of the big issues with that is that income taxes are only collected at the provincial and federal level. Now, a chunk of that money gets sent down to lower levels of government— Waterloo region where I live recently received $600M from upper levels of government for a light rail system that is now built and operating, and the current budget shows 27% of revenue coming from "provincial and federal grants". The thing is, that money which comes from the upper levels is extremely subject to the whims of those governments; it can fluctuate wildly depending who comes into power and what their priorities are. So without some guarantees around it, I can understand the municipalities wanting a stable source of income over which they have some agency, and out of which they can reap immediate benefit from growing the local economy. Anyway, I'd love to hear from someone in Germany how this is resolved there; but I'd assume there'd need to be some pretty structured, long-term agreements around minimum amounts, percentages of new growth, and so on.
Dylan16807 6y ago
So what? I hope to be wealthy and not pull up the ladder behind me.
JamesBarney 6y ago
There are other reasons to oppose them like they historically bring in very little money, they're a pain in the ass to administer, capital flight. Some evidence for this are parts of Europe is abandoning their wealth taxes. If you want to raise money or reduce inequality there are better ways to do it. Income tax, capital gains, inheritance, etc...
- jahaja 6y ago
  > Some evidence for this are parts of Europe is abandoning their wealth taxes. That's not evidence. We have right-wing parties in Europe too. They introduce right-wing policies when they have power, such as the above.
  - JamesBarney 6y ago
    Do you think that successful policies are as likely to be rolled back as unsuccessful ones?
    - jahaja 6y ago
      What kind of strange reasoning is that? Policies are enacted for multiple reasons, very often without any concrete evidence that it's better or worse.
coliveira 6y ago
Also called "American dream".
OminousWeapons 6y ago
Equally as valid to say you are in support because you believe you will derive additional benefits financed by taxes you will never have to pay.

pfortuny 6y ago

Among other things I guess “wealthy” is an easily movable goal post...

throwaway2048 6y ago
This seems to be a classic problem in American political discourse, people immediately discount solutions for very serious problems that exist right now, due to (often extremely shaky) hypotheticals that might some day come to pass (usually with a massive heaping helping of slippery slope fallacy).
- pfortuny 6y ago
  Well, as long as there is no definition of “wealth”, there is a slippery slope. Is having saved 200.000$ in 30 years (not so bonkers) being rich?
- nemo44x 6y ago
  I disagree. We have evidence of this happening repeatedly. Income tax being the prime example. I believe the problem is this: we hardly ever describe the end state. We don't define a metric that we look to achieve and then what we change about the policy when we've achieved it. So what happens is bloated bureaucracies become established and fight for self preservation, even if the mission they were on is complete.

vmception 6y ago

Hard to value creating expensive compliance and easy game-ability. Not easily convertible to cash. Doesn't fix the government's spending pattern or plug its budget hole unless it resorts to full on expropriation. Not competitive.

yboris 6y ago
I heard an idea: "you must declare all your assets, if an asset is found that you're not claiming, it becomes government property". So if you try to game the system by not claiming a vacation home, it just becomes public property. Thoughts?
- vmception 6y ago
  still very gameable. The LLC with the innocuous name of 123 Main St LLC which is the owner of the property at 123 Main St definitely has an owner, and it might not be a tax resident because the LLC is owned by 123 Main St Limited in the Cayman Islands and the ultimate beneficial owner, who is still unknown at this point, may not be an American to begin with. So just applying heuristics to "hey that house doesn't appear in our tax records get it boys" would create more problems than you think. And this also circles back to "not competitive". If your country has problems with expropriation people will stop coming there, and others will leave. But also note, the US constitution does protect against expropriation in the 5th amendment. When rich people start being the subject of civil asset forfeiture the 5th amendment will suddenly start applying again.
bilbo0s 6y ago
1 and 2 are easily surmountable. I wouldn't even call those challenges. (We've had property taxes for decades.) 3 and 4 are the real problems with a wealth tax. The fundamental issue is that the government spends too much money. The politicians and the voters who support them refuse to support cuts in the magnitudes necessary to bring that situation back in hand. Many don't even believe it is a problem. On top of all that, the programs they refuse to cut, at every governmental level, are exactly the programs that suck up the most money. Medicare, Military, Police and Fire, on and on. 99.999% of all voters are like the family in the financial advisor's office who are willing to cut the trips to Starbuck's or go to a cheaper gym. So they feel they are being responsible. But they tell the financial advisor that the kids' private school tuition and the $50,000 cars they drive are not up for discussion. (Lord help you if you have the temerity to bring up the biggest issue of all, the $500,000 house they live in. You better have you kevlar on for that discussion.) What can you do with people like that?

bdangubic 6y ago

If my wealth comes from owning a percentage of a company (say I own 30% of AMZN) what is the way to tax me other than taking my shares, i.e. the Gov would take certain percentage of my shares? And if we go that route how many years would it go by before Gov owned majority of shares of most companies? Lots of people scream that we should tax the wealthy but I do not follow how you tax someone whose wealth comes from large ownership of a big company...?

kalenx 6y ago
I don't see how you came to your conclusion. Gov would tax you as they do now (including when you receive shares for instance), by asking you money. It is up to you to find it. If your assets are illiquid, then it is your problem not the government's one -- and in some cases it can indeed be quite unfair, e.g. for some startup employees.
mattnewton 6y ago
Simple, it’s progressive, so if you are very wealthy and own 30% of the company you might need to sell 5% to pay off wealth taxes over a few years, and you sell them to people or institutions, with less wealth (and therefore less wealth taxes due). It wouldn’t end up with the government owning the shares, it would end up with people at a tax advantage relative to you owning the shares. Whether or not that is a good idea, I don’t know.
TheDong 6y ago
Let's look at jeff bezos for example. He sells over a billion dollars worth of amazon stock each year [0] (those numbers have increased slightly since then actually). Fine, he pays some of that to the government, and maybe sells slightly more. I don't see the problem. If, in fact, your wealth only comes from ownership in a company and you have no other source of wealth, then yes you would be encourages to sell your shares to pay the wealth tax. I don't see why this is a problem. That's kinda the point of a wealth tax, that yes you do get taxed on your wealth. [0]: https://www.reuters.com/article/us-space-bezos/bezos-is-selling-1-billion-of-amazon-stock-a-year-to-fund-rocket-venture-idUSKBN1772ZQ https://www.reuters.com/article/us-space-bezos/bezos-is-sell...

AnimalMuppet 6y ago

I'm not the one you're asking. But here's my take: To some degree, wealth taxes break down the idea of private property ownership. "Your right of ownership is secured by law, but if you own too much, we'll take some of it away." I know that's not the way it's sold. But that is one aspect of the reality of it. I am in favor of the continued existence of private property rights, and for that reason I don't like a wealth tax. Also, such things tend to grow with time. You're going to tax those with more than a billion dollars? Seems OK, no relevance to me, and those people can afford it. You need more money this year, and you're going to tax those with more than 10 million? Well, I don't have that, either, but it's getting closer. Need still more money, and so you're moving it to a million? I might, by then, especially if inflation kicks back up. On the other hand, you could make a reasonable case that the existence of a wealth disparity of the magnitude that exists today is a threat to our society, especially if it can be inherited. So I lean against a wealth tax, but I can also see reasons for it...

fossuser 6y ago

For me it comes down to a few things. - I think wealth can be created and isn't always a zero sum transfer - I think we want to incentivize wealth creation - I think economic growth constrained by protection for human rights and environmental destruction is the best way to improve the quality of life for the most people the fastest. - I think wealth taxes disincentivize a lot of these things with knock on effects (forcing people to liquidate their company equity, etc.). It's also repeatedly taxing the same money every year eventually down to whatever the cap is. I'd rather set taxes/caps at generational wealth transfer if you're going to try and incentivize something - might as well go after dynastic wealth and the children that benefit from it without creating anything. I think focusing on housing and land use/zoning would also directly benefit more people by fixing existing perverse incentives. PG writes about some of this in essays, Tyler Cowen's book Stubborn Attachments was also interesting on the growth aspect (though wealth taxes aren't specifically mentioned). Why do we think wealth will be better allocated by a government? This money is largely already taxed either via capital gains or income. I'd suspect a lot of our problems are problems of incentives and competing priorities, not of available cash flow for government programs. That's my take anyway, I suspect a 'hate the rich' motivated reasoning position pushing the idea of a wealth tax more than any serious thinking about incentives and what it might do. It seems political. (I am nowhere near the level where the proposed tax would start and probably never will be.)

mac01021 6y ago

I don't have a super-well formed opinion about this but I think a wealth tax has some issues that don't get enough attention. Like that the market value of an asset can fluctuate wildly and become untethered from the actual rational value of the asset. So imagine you're Bezos or Musk and you're not trying to be super rich per se but just trying to build a company according to your vision and so you have a bunch of equity in the company (so that you can control it) but no matter how loudly you proclaim that the market is overvaluing your stock the price keeps going up and now you have to sell lots of shares in order to pay the wealth tax assessed against your equity and you don't have a controlling vote anymore and your vision for your company just dies. And maybe the hordes of people who think no single person should have a controlling share of a billion-dollar company are right - I don't know. But I'm pretty sure a large fraction of people who build companies (like Bezos or Musk) are doing it to build an enterprise, and not for the cash. Otherwise they'd just stop and have fun with their private jets at a certain point. So if a wealth tax were not going to let them keep control of their enterprise beyond the first decade, they probably would opt not to waste their time building it at all. And maybe that's fine, but I'm not sure what society looks like in a world where people don't want to build companies.

nine_k 6y ago
There is a ton of examples of societies where people don't want to build enterprises. Medieval Europe, where guild and social strata regulations prevented any large enterprise, except maybe large merchant operations. Sime of the poorer modern-day African countries, where social norms prescribe that any fortune has to be divided with the extended family, so concentration of assets to keep building something large is hard. I frankly think that the American model of free enterprise with reasonably few restrictions made most to improve the well-being of its population.
fossuser 6y ago
I think a wealth tax is a bad idea (as described in my comment above), but you can structure equity so that you retain control even without a large holding of shares (see: Palantir, Facebook). Arguably a wealth tax would create an incentive for everyone to do this which I would argue is probably bad since then the company controllers have less skin in the game. Generally I think a wealth tax creates a ton of these perverse incentives with little true upside.