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This proposal is 0.4% tax on wealth above $30m. The Dutch equivalent is 1.6% tax on wealth above €1m. The number of Ultra High Net Worth Individuals in the Ne

This proposal is 0.4% tax on wealth above $30m. The Dutch equivalent is 1.6% tax on wealth above €1m. The number of Ultra High Net Worth Individuals in the Netherlands is still increasing.

Mountain_Skies 6y ago
The difference here is that California is a state not a country. It's much easier for a wealthy person or company to relocate to another state than it is to another country. The EU may have made it easier to relocate to another EU country than it was in the pre EU days but it's still nowhere as frictionless as moving from California to Washington, Texas, or Georgia.
- throwaway2245 6y ago
  Sure, but it seems that HNWIs are moving into the Netherlands, also despite this difficulty of relocation.
- skinnymuch 6y ago
  OP says people are moving into Netherlands. That’s effort. Not just not moving out.
  - threatofrain 6y ago
    I'm not sure those execs getting citizenships are actually moving in as opposed to buying an expensive property and making some kind of investment.
    - skinnymuch 6y ago
      Ah. Do they not have to pay Dutch taxes then? Aside from property related ones?
Metus 6y ago
And the Swiss ask for 0.13% and 1.01% depending on the Canton, pension funds are exempt.
- leetcrew 6y ago
  I believe switzerland has no capital gains tax though. I did some napkin math a few weeks ago with a buddy who was considering moving there and we found that there are some situations where you would actually pay less tax vs US capital gains.
syshum 6y ago
There is a HUGE difference between the 2 if I understand them correctly CA is imposing a tax on the TOTAL wealth of a person over the limits and excluding real property. The Dutch impose a tax on the increased value of the wealth in the year, even if it was not "realized", which is more like our Capital Gains. So an example, if you had Stocks worth 100 million, and they increased in value to 108 million in 2020 Dutch: 108-100: 8 million taxable, you owe $128,000 CA: 108 Million, you owe $432,000 Pretty large difference and the Dutch Model is better in some ways when your assets DROP in value, which does happen, so if we are in recession your stocks go from 100 million to 90 million, under the Dutch Model you would not owe taxes, under the CA model you still would
- est31 6y ago
  So your money just made you 8 million USD and you had to pay 432k in taxes. Compare that to someone who makes 8 million USD cash through labour. They have to pay way more in taxes, around 1 million according to this calculator: https://smartasset.com/taxes/california-tax-calculator https://smartasset.com/taxes/california-tax-calculator Edit: just found out that in California capital gains are regarded as normal income. So you'd have to pay that 1 million already, but now you'd have to pay another additional 432k... so tax increase of 50%.
  - syshum 6y ago
    So what about if your Stocks lost value in the year? Same scenario, 100million in stocks but due to a bad economy you they are now worth 95 million Do you believe CA should collect $380,000 from someone that already lost 5 million that year? There is always risks in investments, it is not always gains. CA does not properly account for that IMO Further you will not get me support income based taxation either, I find income based taxation to be more immoral and unethical than wealth based taxation. It is literally stealing a persons labor I am a proponent of Henry George's Single-Tax System
    - est31 6y ago
      Huh interesting, didn't know about George's tax system. Sounds intriguing and would solve some real problems. As for losing money, yeah in that scenario it's worse. The dutch system sounds better in the regard that it only taxes gains, but of course you'd here have issues as well with volatile valuations where you have gains in one year and losses in the next. Regarding your potential loss scenario, hypothetically if you've owned 100 million one year and then over the course of 3 years it went down to just 1 million. Wouldn't it be beneficial for society had you contributed a little piece of those 100 million to society when you still had it? Other than you just holding onto it, benefitting nobody, not even you, as you lost it :). In the scenario where your money is stable or increases in value, this is no issue. That being said, I'm not the greatest fan of estate taxes. My main issue with them is that they basically force you to have some degree of returns otherwise your money disappears, which is IMO kinda sad as it encourages people to invest in even greedier ways. You can e.g. buy a rental property and come up with shitty reasons to evict the tenants. Or you can buy it and keep them around for as long as they live.
beagle3 6y ago
The Dutch tax from cursory reading is not comparable - apparently, if you pay wealth tax, you are exempt from capital gains tax; also, if your wealth is real estate outside of the Netherlands, it is not taxed. It may be more comparable to Norway’s wealth tax, which is 0.85% of everything above 200K€ (With some provisions for primary residence and illiquid shares IIUC, discounting these somewhat) A Norwegian tax professional I had a chance to talk to a few months ago claimed that wealthy people were leaving Norway because of the wealth tax. Are there any Norwegians in the forum that can say more about this?
- throwaway2245 6y ago
  That's a fair critique. I understand the Dutch tax replaces capital gains with a fixed amount based on your total wealth (not your gain). So a fair comparison with California should probably include an additional amount for California's CGT. They present it in the Netherlands as if you are paying 30% "capital gains" tax on an assumed-fixed gain of 5.28%, your actual gain becoming irrelevant under this system. You also pay this earlier - annually, not at the point of realising the profit. Overall, the Dutch total tax on wealth is still going to be considerably higher.
- Thlom 6y ago
  Norwegian here. Some filthy rich are moving their assets or even themselves to tax havens. F.ex. Norways richest man, the oil and shipping millionaire John Fredriksen made himself a Cypriot a few years ago. Some other are transferring their assets to their children who live in f.ex. Switzerland. But overall I don't think capital flight is a huge issue.
beezle 6y ago
Not big fan of taxes in general but I find the whole 'wealth' tax to be especially odious. Why not call it what it is, a pre-death estate tax? If the government is to tariff/tax, it should be done at the time of use or income generation/realization one time. Unfortunately double jeopardy laws seem not to apply to capital.
- throwaway2245 6y ago
  Tax is not a one-time contract nor a punishment, as you are presenting it to be. It's a democratic agreement about how society should be run. Another democratic agreement is that you are allowed and encouraged to own capital. (That's why it's called 'capitalism', to distinguish it from other possibilities)
- notacoward 6y ago
  > Not big fan of taxes in general Statements like that never augur well for what follows. > Why not call it what it is, a pre-death estate tax? Do you have a cogent objection to estate taxes? Many would consider them the fairest of all possible taxes, since your property rights - past, present, and future - evaporate at death. > it should be done at the time of use or income generation/realization Why? What's the rationale, besides personal benefit/preference? Taxing money in motion reduces motion, which is hardly a good thing except when the motion itself is illusory arbitrage (e.g. HFT). > double jeopardy laws Double jeopardy is a concept of criminal law applied to humans. It's certainly the wrong term here, and arguably the wrong concept. Even your own "time of use" standard leads to the same money being taxed multiple times. Why should it be any different when assets are held instead of exchanged (see above about money in motion)? Henry George and others have made eloquent arguments for taxing wealth - especially land - instead of income. It has been tried many places and times, generally with good results. Do you have any substantive counterargument, or just random phrases plucked from a pseudo-libertarian website?
ichbinwiederda 6y ago
I don't like the Dutch system, having experienced it personally, but it is worth pointing out that the wealth tax exists in place of a capital gains tax.

This proposal is 0.4% tax on wealth above $30m. The Dutch equivalent is 1.6% tax on wealth above €1m. The number of Ultra High Net Worth Individuals in the Netherlands is still increasing.

Mountain_Skies 6y ago

The difference here is that California is a state not a country. It's much easier for a wealthy person or company to relocate to another state than it is to another country. The EU may have made it easier to relocate to another EU country than it was in the pre EU days but it's still nowhere as frictionless as moving from California to Washington, Texas, or Georgia.

throwaway2245 6y ago
Sure, but it seems that HNWIs are moving into the Netherlands, also despite this difficulty of relocation.
skinnymuch 6y ago
OP says people are moving into Netherlands. That’s effort. Not just not moving out.
- threatofrain 6y ago
  I'm not sure those execs getting citizenships are actually moving in as opposed to buying an expensive property and making some kind of investment.
  - skinnymuch 6y ago
    Ah. Do they not have to pay Dutch taxes then? Aside from property related ones?

Metus 6y ago

And the Swiss ask for 0.13% and 1.01% depending on the Canton, pension funds are exempt.

leetcrew 6y ago
I believe switzerland has no capital gains tax though. I did some napkin math a few weeks ago with a buddy who was considering moving there and we found that there are some situations where you would actually pay less tax vs US capital gains.

syshum 6y ago

There is a HUGE difference between the 2 if I understand them correctly CA is imposing a tax on the TOTAL wealth of a person over the limits and excluding real property. The Dutch impose a tax on the increased value of the wealth in the year, even if it was not "realized", which is more like our Capital Gains. So an example, if you had Stocks worth 100 million, and they increased in value to 108 million in 2020 Dutch: 108-100: 8 million taxable, you owe $128,000 CA: 108 Million, you owe $432,000 Pretty large difference and the Dutch Model is better in some ways when your assets DROP in value, which does happen, so if we are in recession your stocks go from 100 million to 90 million, under the Dutch Model you would not owe taxes, under the CA model you still would

est31 6y ago
So your money just made you 8 million USD and you had to pay 432k in taxes. Compare that to someone who makes 8 million USD cash through labour. They have to pay way more in taxes, around 1 million according to this calculator: https://smartasset.com/taxes/california-tax-calculator https://smartasset.com/taxes/california-tax-calculator Edit: just found out that in California capital gains are regarded as normal income. So you'd have to pay that 1 million already, but now you'd have to pay another additional 432k... so tax increase of 50%.
- syshum 6y ago
  So what about if your Stocks lost value in the year? Same scenario, 100million in stocks but due to a bad economy you they are now worth 95 million Do you believe CA should collect $380,000 from someone that already lost 5 million that year? There is always risks in investments, it is not always gains. CA does not properly account for that IMO Further you will not get me support income based taxation either, I find income based taxation to be more immoral and unethical than wealth based taxation. It is literally stealing a persons labor I am a proponent of Henry George's Single-Tax System
  - est31 6y ago
    Huh interesting, didn't know about George's tax system. Sounds intriguing and would solve some real problems. As for losing money, yeah in that scenario it's worse. The dutch system sounds better in the regard that it only taxes gains, but of course you'd here have issues as well with volatile valuations where you have gains in one year and losses in the next. Regarding your potential loss scenario, hypothetically if you've owned 100 million one year and then over the course of 3 years it went down to just 1 million. Wouldn't it be beneficial for society had you contributed a little piece of those 100 million to society when you still had it? Other than you just holding onto it, benefitting nobody, not even you, as you lost it :). In the scenario where your money is stable or increases in value, this is no issue. That being said, I'm not the greatest fan of estate taxes. My main issue with them is that they basically force you to have some degree of returns otherwise your money disappears, which is IMO kinda sad as it encourages people to invest in even greedier ways. You can e.g. buy a rental property and come up with shitty reasons to evict the tenants. Or you can buy it and keep them around for as long as they live.

beagle3 6y ago

The Dutch tax from cursory reading is not comparable - apparently, if you pay wealth tax, you are exempt from capital gains tax; also, if your wealth is real estate outside of the Netherlands, it is not taxed. It may be more comparable to Norway’s wealth tax, which is 0.85% of everything above 200K€ (With some provisions for primary residence and illiquid shares IIUC, discounting these somewhat) A Norwegian tax professional I had a chance to talk to a few months ago claimed that wealthy people were leaving Norway because of the wealth tax. Are there any Norwegians in the forum that can say more about this?

throwaway2245 6y ago
That's a fair critique. I understand the Dutch tax replaces capital gains with a fixed amount based on your total wealth (not your gain). So a fair comparison with California should probably include an additional amount for California's CGT. They present it in the Netherlands as if you are paying 30% "capital gains" tax on an assumed-fixed gain of 5.28%, your actual gain becoming irrelevant under this system. You also pay this earlier - annually, not at the point of realising the profit. Overall, the Dutch total tax on wealth is still going to be considerably higher.
Thlom 6y ago
Norwegian here. Some filthy rich are moving their assets or even themselves to tax havens. F.ex. Norways richest man, the oil and shipping millionaire John Fredriksen made himself a Cypriot a few years ago. Some other are transferring their assets to their children who live in f.ex. Switzerland. But overall I don't think capital flight is a huge issue.

beezle 6y ago

Not big fan of taxes in general but I find the whole 'wealth' tax to be especially odious. Why not call it what it is, a pre-death estate tax? If the government is to tariff/tax, it should be done at the time of use or income generation/realization one time. Unfortunately double jeopardy laws seem not to apply to capital.

throwaway2245 6y ago
Tax is not a one-time contract nor a punishment, as you are presenting it to be. It's a democratic agreement about how society should be run. Another democratic agreement is that you are allowed and encouraged to own capital. (That's why it's called 'capitalism', to distinguish it from other possibilities)
notacoward 6y ago
> Not big fan of taxes in general Statements like that never augur well for what follows. > Why not call it what it is, a pre-death estate tax? Do you have a cogent objection to estate taxes? Many would consider them the fairest of all possible taxes, since your property rights - past, present, and future - evaporate at death. > it should be done at the time of use or income generation/realization Why? What's the rationale, besides personal benefit/preference? Taxing money in motion reduces motion, which is hardly a good thing except when the motion itself is illusory arbitrage (e.g. HFT). > double jeopardy laws Double jeopardy is a concept of criminal law applied to humans. It's certainly the wrong term here, and arguably the wrong concept. Even your own "time of use" standard leads to the same money being taxed multiple times. Why should it be any different when assets are held instead of exchanged (see above about money in motion)? Henry George and others have made eloquent arguments for taxing wealth - especially land - instead of income. It has been tried many places and times, generally with good results. Do you have any substantive counterargument, or just random phrases plucked from a pseudo-libertarian website?

ichbinwiederda 6y ago

I don't like the Dutch system, having experienced it personally, but it is worth pointing out that the wealth tax exists in place of a capital gains tax.