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Well I guess I'll take the apparently bold stance here that this isn't the end of Silicon Valley or California and yes this is fair and further, good. When peop

Well I guess I'll take the apparently bold stance here that this isn't the end of Silicon Valley or California and yes this is fair and further, good. When people are getting 5-6% returns on investments (minimum), 0.4% is still not even stopping the rich get richer effect. Not to mention that it's almost certain no one here will ever be touched by this tax. If you're going to move where you live or significantly alter where you spend you time because of 0.4% of things above 30M, that's a real sign of just how far American greed has gone. The rich will drive themselves right into another french revolution unless they start realizing that taxes need to return to where they were from the 1930's-1970's. Trickle down economics is a known failure and at this point it's a question of when the pendulum will start swinging the other way.

Trisell 6y ago
I think your premise that they will experience French Revolution like consequences is overlooking the fact that unlike the 1700s. Up and taking your money to another country that still likes you is the click of a mouse and a private jet flight out. So no they won’t capitulate to higher taxes of earlier times. They will just leave. Like they already are at the threat of it.
- adjkant 6y ago
  Maybe a percentage will, but I think when people are trying to guess and assume what these people will do as "rational economic agents", they miss the human factors. No one is going to pick where they go to college based on the taxes on the ultra-rich unless they are obsessed with money. Once rich, are you going to uproot yourself entirely from any family, friends, and connections in the US? You have to consider that rational economic behavior still has to consider what the point of it all is, and money for the sake of money doesn't tend to be the answer even among the hyper-rich. What these people will come to terms with is a pretty age-old lesson - there are things more important than just how rich you are, and most of those are human. So long as they can maintain their lifestyle, I think many will want to stay. Needing to find 20K in a couch cushion to pay for your 5M in assets each year that you make 300K on won't be the thing that makes you move. Of course, the rich today also have many legal shields and layers that will protect them from real french revolution violence. But I think anyone can feel the shift right now. Go on Tiktok and see just how many young people are getting real into eating the rich :)
  - DennisP 6y ago
    Changing countries is hard, but changing states is easy. People do it all the time. If you have a private jet for visits to other states, it's especially easy.
  - admiralspoo 6y ago
    Plenty already have. Eric Schmidt, for example, is now a citizen of Cyprus https://www.seattletimes.com/business/rich-americans-increasingly-are-looking-for-second-passports/ https://www.seattletimes.com/business/rich-americans-increas...
    - Scarblac 6y ago
      Which is why the proposal is based on where time is spent, not what you're a citizen of.
      - daenz 6y ago
        Why does a wealthy citizen of another country have to physically spend 60 days in California? You're suggesting that the wording of the law is not trivial to circumvent, especially for people with large amounts of wealth.
        jelliclesfarm 6y ago
        it's not like SF or NYC are tourists paradise. you cant walk down mission st without some random homeless person trying to attack you. Gavin Newsom and London Breed should just convert Moscone center into a homeless shelter. problem solved.
    - tafda 6y ago
      An EU passport is nice to have, doesn't look like he's moving out of California though: https://variety.com/2020/dirt/moguls/ex-google-ceo-eric-schmidt-buys-31-million-santa-barbara-mansion-1234765879/ https://variety.com/2020/dirt/moguls/ex-google-ceo-eric-schm...
    - 6y ago
- WealthVsSurvive 6y ago
  And when those countries do the same and desperate people follow them for vengeance the world over, where will they go then?
- caymanjim 6y ago
  While this proposed California law is unlikely to be Constitutional, there are federal laws that prevent people from simply leaving the country and taking all their money with them to avoid taxes. You can try, and with good lawyers and accountants, you can certainly shelter a lot of it, but in the end you can't avoid tax liability just by leaving. Plenty of uberrich get away with it, but it's still not legal. You can't even completely avoid it by renouncing your citizenship if you're a dual national; there's still a liability. I know that the uberrich get away with dodging taxes all the time, but there are potentially high costs, like having your assets confiscated, or having to hide out in your island fortress and never return to the US lest you end up in prison.
  - deleted 6y ago
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- ashconnor 6y ago
  Begs the question why haven't they left already. Is there some sweet spot of taxation before the majority the people being taxed resort to capital flight?
  - imoverclocked 6y ago
    How many people do you know that have left all of their bad relationships on day 1?
- matthewdgreen 6y ago
  The idea here is that it’s easy to find a safe, welcoming host nation with low taxes, and still be able to benefit from the functioning economies of the nations you left behind. However this is a pretty artificial system that only exists when there’s a lot of broadly-shared wealth and stability in the world. This kind of capital flight to the bottom is going to systematically undermine that stability. At the point where things start to seriously malfunction, nobody’s going to give a crap about a little bit of tax.
  - Red_Leaves_Flyy 6y ago
    Seriously. When 10000 m/billionaires decide to flee the states they're going to have bigger problems to contend with. These people have spent so many decades ignoring the poor they won't know they're actually fucked until their mansion in Beverly hills is on fire.
elhudy 6y ago
The reason people resist such a tax is because there is no transparency into where the money is going. If there was traceability into putting that money towards positive social programs, for example, there might be less opposition. I couldn't find what the tax was supposed to go towards but I also didn't make it beyond the paywall.
- graeme 6y ago
  All taxes go into general revenues. Governments don’t operate by taxing one thing and spending it specifically on another. Gas tax is the most cited counterexample, but even there roads get money from general revenues.
  - sojournerc 6y ago
    Another counterexample is recreational cannabis sales tax. In Colorado they are earmarked for education and arts afaik.
  - elhudy 6y ago
    I understand that's how things currently are, but I don't believe it's how things need to be.
  - zepto 6y ago
    Gas tax isn’t a counter example since the earmarks have exceptions that allow the money to be used for arbitrary other purposes, which in practice is the case.
- zepto 6y ago
  This! California had had a lot of tax revenue over the last couple of decades but doesn’t seem to have much to show for it. Where is the explanation for how the money was spent, why it hasn’t paid off, and what would be different? As far as I can tell it’s not ‘earmarked’ it’s just more tax for the general fund. Also, Earmarks have never been trustworthy so it wouldn’t matter even if it were earmarked.
  - 6y ago
WillPostForFood 6y ago
because of 0.4% If California was well run, clean, and had otherwise lower tax, then .4% might be easy to ignore. But if you’re already on the fence, and not happy with things, and have been talking to real estate agents in Seattle, Austin, Miami, or Singapore, then this just the kick in the butt you might need to go through with leaving.
- ericmay 6y ago
  Singapore is a weird one to throw in there with the others in that list. Could you elaborate?
  - chiph 6y ago
    Likely for people with Chinese heritage or relatives. It's clean, orderly, and it's super easy to start a business there.
    - medium_burrito 6y ago
      Like Switzerland, but for Chinese people (and tropical, friendlier, flatter and grimier).
- carlio 6y ago
  Local governance running well, public services like cleaning, helping homeless etc, all require tax dollars. Saying "I'd pay tax if they had enough money they get from tax to fix the problems that cause me not to want to pay tax" seems like it's a bit of a chicken-egg problem.
  - nthj 6y ago
    This argument seems to make sense on the surface, but California already has some of the highest income taxes in the country. To make an appeal to extremes, if California had a 40% income tax they wanted to raise to 45% asking, “show me how you have demonstrated good stewardship in what you are already taking” would be, I imagine, somewhat common. Reasonable people can of course debate that percentage, and can do so today based on California already having high income taxes.
cltby 6y ago
HN commenters are up in arms when e.g. Google stakes a claim on the off-hours output of their current employees. They would be even more furious if Google asserted ownership of future income of former employees. And if Google further claimed a right to lifetime earnings of former employees... I can only imagine the tone here. It's unfortunate that HN brings out the champagne when governments take similar predatory actions. > that's a real sign of just how far American greed has gone Glib support of expropriation shows just how far American collectivism has gone. Naked envy and resentment hiding behind a fig leaf of public mindedness.
hpoe 6y ago
And for those of us that have seen this type of tax play out historically where "it's just 0.4% and just on the top 1%" and want to avoid being dragged down any farther?
api 6y ago
If California were well run, sure. Do something about the housing and homeless crisis and we’ll talk. California doesn’t have a money problem. They have a lack of political will problem and an incompetence (or corruption) problem. The state is held hostage by NIMBYs and is chronically unable to build infrastructure. Look at the high speed train disaster for an example of the latter. NIMBYs ensure that any money or effort put into the homeless problem is also wasted, as there is no affordable housing for these people to inhabit even if their mental health issues are dealt with. More money won’t fix these things. It will probably go into the pockets of the people who created these problems. Note that much of what I wrote applies to the USA broadly. We are taxed not much less than Canadians, but have the infrastructure and social services of a “developing” nation. Give me either low taxes at e.g. Costa Rica levels OR shiny infrastructure, free college for my kids, and universal healthcare. Oh wait Costa Rica has universal health care... We are great at setting money on fire in this country.
- AsyncAwait 6y ago
  > Do something about the housing and homeless crisis and we’ll talk You do realize a wealth tax is one way to bring in income to try to fix these problems right? You guys don't even have universal healthcare in the middle of a global pandemic. Laughably sad.
  - cltby 6y ago
    There’s plenty of tax revenue to fund nearly all such priorities. It’s sadly squandered, in large part because voters have ideological commitments to confiscation, and no such commitments to effective government.
    - AsyncAwait 6y ago
      > in large part because voters have ideological commitments to confiscation, and no such commitments to effective government. I highly doubt it's that rather than the fact special interest are prioritized over 'effective government' in large parts due to some conservatives and neoliberals promoting the idea of corruption == freedom. When there's a thousand ways to legally bribe politicians, of course there's no incentive for effective government.
jandrewrogers 6y ago
The taxes from the "1930's-1970's" were not particularly high, that is a misunderstanding of how the structure of the tax code has changed. Net of deductions, taxation hasn't changed that much. You can't look at the nominal tax rates in isolation while ignoring the scope of deduction against those rates. Eliminating deductions for high-income earners while reducing tax rates on that income is revenue neutral, and generally preferable as a policy.
- csa 6y ago
  Thank you for pointing this out. Many people, especially at HN for some reason, don’t realize that the Tax Reform Act of 1986 made tax rates more transparent which is why the “sticker rate” was lower. Interestingly, the former tax rates often times screwed the middle class much more, because they couldn’t afford an accountant and/or engage in the wide range of financial maneuvers that could substantially reduce one’s tax burden. No higher earner ever paid sticker price tax rates when they were that high. Source: My mother. She has been a tax accountant since the 70s. The Tax Reform Act changed the field considerably.
- wingspar 6y ago
  Yes, pre 1986 tax reform, personal credit card interest was deductible for any purchase. Crazy times... https://turbotax.intuit.com/tax-tips/small-business-taxes/is-interest-on-credit-cards-tax-deductible/L3TlLAaoI https://turbotax.intuit.com/tax-tips/small-business-taxes/is...
- Meekro 6y ago
  The evidence for this is that federal tax revenue as a percentage of GDP has been 15-20% since World War 2. Massive swings in tax policy have not changed this number, proving that those policy changes were more restructurings than tax cuts. https://en.wikipedia.org/wiki/Hauser%27s_law https://en.wikipedia.org/wiki/Hauser%27s_law
bassman9000 6y ago
because of 0.4% It's not because of a .4. As you said, barely anyone will pay it. And still people are leaving. It's because it's now a fact: That California politicians are unable to spend wisely. That California politicians have great appetite for raising taxes, and inventing new ones. So it's not a .4 that drives people out. It's because they know what's next.
afpx 6y ago
There's always going to be a demand for California. It's a unique country - the vibe, the culture, the creativity, the beauty. It's one of the best places in the world to start a creative business because of the raw talent that's available. People will continue to flock there, regardless of the taxes, especially in a post-scarcity world. It's good for Californians to enforce their values. They'll keep their country unique, while the rest of the world homogenizes into a capitalist dystopia.
- ulfw 6y ago
  It is not a country. As much as you like it to be one.
ellyagg 6y ago
Ah, yes, threatening to murder people you're jealous of. This is the content I come to Hacker News for!
- iaHN 6y ago
  The underlying counterargument is that tax dodging is a form of violence against the poor.
  - cltby 6y ago
    Rich guy: “Mind keeping your hands off my stuff?” Confiscationist: “he’s attacking me!”
    - iaHN 6y ago
      The underlying counterargument was that it was never completely "your stuff" to begin with.
      - Red_Leaves_Flyy 6y ago
        Background reading: https://en.m.wikipedia.org/wiki/Wage_slavery https://en.m.wikipedia.org/wiki/Wage_slavery
      - daenz 6y ago
        And we should leave the allocation of who is allowed to own how much stuff to who exactly? Politicians? Your average person on the street? Who are those economic geniuses who will distribute everything with objective correctness? That is the alternative that it sounds like you are promoting.
        damnyou 6y ago
        I share your concerns about centralized management, which is why the money should be redistributed in the form of a UBI to enable decentralized decision-making.
deleted 6y ago
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annexrichmond 6y ago
Once the infrastructure is in place to assess this kind of tax, it'll be a matter of time before it starts applying to those with >10M wealth, then >1M, etc
- mgolawala 6y ago
  Yup. It's called boiling the frog. I am not totally against wealth taxes, however I disagree with the approach. What I do not understand is why not just implement a more aggressive estate tax on people and close the "trust" and "foundation" loopholes for avoiding the estate tax. Let's take Jeff Bezos as an extreme example (who isn't even a California Resident). At least until we figure out immortality, Jeff Bezos will die someday. Let him enjoy the wealth that he has earned by creating a company that has benefited society as a whole. When he dies, his wealth should return to the society from which it came. He was rewarded for his work/ingenuity/effort during his life, and now that he is gone, society reclaims the rewards it had given him. What is wrong with that? The way I see it, once you are dead you don't get a vote, and you don't get a say in the affairs of the world so you shouldn't be able to direct that wealth through any kind of inheritance, foundation or trust. His children have done nothing to earn or create that wealth themselves so why should they deserve any of it? They will have the same opportunities to create and earn wealth that he did, and they will benefit from the society he contributed to. If they are able to build equivalent wealth via another Amazon.. Great! They earned it! if not that is fine too. You want to help your kids? Teach them how to fish for themselves instead of giving them an unlimited supply of fish. Passing down wealth from generation to generation or directing wealth long after you are dead through foundations and trusts is directly opposed to any effort to give "equality of opportunity" for future generations.
  - antisthenes 6y ago
    > When he dies, his wealth should return to the society from which it came. Sorry, but this stance is outright ignorant. What do you mean return to society ? His wealth is Amazon, the company, dozens of warehouses and an incredible logistics chain. His wealth currently provides a pretty damn good service to society, in the form of being able to get items delivered fairly quickly and contact-less in the time of a pandemic. Are you proposing we take his Amazon holdings after his death and give every person in the county a fractional share? Or however many shares it comes out to? That's certainly a possibility, but the realistic outcome of that is that most people try to sell their shares for cash right away, thereby crashing the price, and most shares ending up in institutional investment banks and funds within the first year. I'm not against a stronger estate tax either, but you have to be real careful when you're trying to divvy up massive amounts of wealth on a short time scale and think of the second order effects.
entee 6y ago
Thing is we’ve done the experiment and it doesn’t work. France had a wealth tax (called the ISF, impôt sur la fortune) and it never actually garnered the expected revenues. This is because wealthy French people moved to Brussels, where you still have a pretty nice city and you can still speak French. Macron got rid of it and there was a mini-crash in Brussels real estate as people move back. There’s nothing stopping me or anyone in CA to move to CO or UT or TX. Sure I’m further from the ocean but those are still pretty nice places to live. I love CA and I’m very far from the $30M threshold, but if I did have this sort of tax it’s hard to justify not moving for lower taxes AND cheaper cost of living with very little downside. With the rise of remote work, there’s even less of a downside.
- daveFNbuck 6y ago
  I think that's why they put in the provision that you have to keep paying the tax for 10 years after you move.
  - AnthonyMouse 6y ago
    That's probably the stupidest part of it, because then you convince all the people who imagine they're going to be Elon Musk in ten years that they should leave California immediately.
    - ip26 6y ago
      The interesting part is the next question you have to ask yourself- could Elon have built what he did somewhere else?
      - ishjoh 6y ago
        VCs prefer investing in companies in NYC and the Valley. So Paypal would have probably had to be built in one of those two markets. Once he had a successful company, I suspect he could have gone elsewhere and still received investment and convinced enough talented people to come join his projects. So I think for Elon in particular the answer is yes, but there might have only been a single other place he could have started in the USA, and we're specifically talking about Elon.
yowlingcat 6y ago
> that's a real sign of just how far American greed has gone. I find that a hard statement to square with the founding principles of American culture. The USA was a country that declared independence and fought a war over taxation. The colonies as a whole were a magnet for opportunistic pioneers -- in fact, for much of history, "opportunistic pioneer" (for better or worse) was and is what people think of when they think of American. So while you're correct that it is a certain kind of greed and self-interest, where I can't understand what you're trying to say is "how far X has gone." What does how far mean? The greed has been at this level since nation's conception. And ostensibly, it was the whole /point/ of the nation.
T-hawk 6y ago
> If you're going to move where you live or significantly alter where you spend you time because of 0.4% of things above 30M, that's a real sign of just how far American greed has gone. I would say this isn't any different than any other greed at any other place or time. It's simply a cost-benefit tradeoff decision. If people perceive that being in California makes more money than the wealth tax costs, they will stay. If not, they will leave. There doesn't have to be any moral or principled component to this, just simple self-interest. Also don't overlook the deterrence factor. The wealthy currently in CA may stay there if moving represents a greater overall cost. But anyone not currently in CA would have a great disincentive to never move there.
- runarberg 6y ago
  Economists love to believe that humans are rational actors, even though it has been shown again and again in experimental settings that only a minority acts in an economical rational way. Economical self interest is a really poor predictor of behavior
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klipt 6y ago
Do you think California will never raise it above 0.4%? This is just a test, if it gets them money it'll surely go much higher. This is a bandaid over Prop 13. We should tax land more instead of having high income taxes, economists agree the land value tax is the most efficient tax.
jseliger 6y ago
California will do absolutely anything to raise revenue except repeal Prop 13. https://www.mcsweeneys.net/articles/i-will-do-anything-to-end-homelessness-except-build-more-homes https://www.mcsweeneys.net/articles/i-will-do-anything-to-en...
yunesj 6y ago
> because of 0.4% ... American greed San Francisco has a city budget larger than most other countries. This election, it voted to pass all nine measures for new taxes! https://sfelections.sfgov.org/november-3-2020-election-results-summary https://sfelections.sfgov.org/november-3-2020-election-resul...
proc0 6y ago
It's never just about the immediate target and/or accounting of the numbers. The problem with going after the rich is that it's setting up a system for this type of control. Government leaders (especially the ones in CA) constantly abuse control, and giving them more points of control makes no sense. One year is a minority being targeted (just not if it's racial, gender etc), the next it will be some large group of people, maybe middle class, maybe small business owners, and they will extend such nonsense to a larger group. These laws have to matter in principle because it is much easier to extend their power then to weaken them or even harder, undo them.
mrtweetyhack 6y ago
So you're OK with it because it doesn't affect you?
csomar 6y ago
> 1930's-1970's The difference, however, is that today's rich people can easily move their residence, and with remote-work; maybe their companies. In the old times, it was not quite easy to move to another country. I can imagine the difficulties (selling your assets, taking your fortune, figuring out the new kingdom, wars and instability, etc...). This is no longer an issue with city-states like Dubai or Panama; and the fact that your wealth is floating online on some stocks, banks, bitcoin, derivatives, or real-estate scattered around the world. This doesn't concern the average joe, however. Which is why he continues to carry most of the tax bill and is cash-strapped. California issue, however, is not the rich are greedy; but that its government is corrupt and inefficient. Raising taxes doesn't help but only grow the corrupt bureaucracy.
nullc 6y ago
> When people are getting 5-6% returns on investments (minimum) The 99th percentile wealth vs 99th percentile taxable income suggests that many very wealthy people are making lower returns in fact. If people are generating those returns, however, there is no need for a wealth tax: the returns are already taxed (and could be taxed at a higher rate without a whole new invasive tax regime).
phkahler 6y ago
>> Not to mention that it's almost certain no one here will ever be touched by this tax. What? Y-combinator takes in lots of people for more than 60 days and they're on track to make a lot of money given the success rate of YC startups. >> When people are getting 5-6% returns on investments (minimum), 0.4% is still not even stopping the rich get richer effect. How is that relevant to taxing people who dont live there?
yibg 6y ago
But 5-6% isn’t guaranteed, while the tax is most certainly guaranteed. For extremely safe investments the yield is what? 1.5% even on long term investments?

Trisell 6y ago

I think your premise that they will experience French Revolution like consequences is overlooking the fact that unlike the 1700s. Up and taking your money to another country that still likes you is the click of a mouse and a private jet flight out. So no they won’t capitulate to higher taxes of earlier times. They will just leave. Like they already are at the threat of it.

adjkant 6y ago
Maybe a percentage will, but I think when people are trying to guess and assume what these people will do as "rational economic agents", they miss the human factors. No one is going to pick where they go to college based on the taxes on the ultra-rich unless they are obsessed with money. Once rich, are you going to uproot yourself entirely from any family, friends, and connections in the US? You have to consider that rational economic behavior still has to consider what the point of it all is, and money for the sake of money doesn't tend to be the answer even among the hyper-rich. What these people will come to terms with is a pretty age-old lesson - there are things more important than just how rich you are, and most of those are human. So long as they can maintain their lifestyle, I think many will want to stay. Needing to find 20K in a couch cushion to pay for your 5M in assets each year that you make 300K on won't be the thing that makes you move. Of course, the rich today also have many legal shields and layers that will protect them from real french revolution violence. But I think anyone can feel the shift right now. Go on Tiktok and see just how many young people are getting real into eating the rich :)
- DennisP 6y ago
  Changing countries is hard, but changing states is easy. People do it all the time. If you have a private jet for visits to other states, it's especially easy.
- admiralspoo 6y ago
  Plenty already have. Eric Schmidt, for example, is now a citizen of Cyprus https://www.seattletimes.com/business/rich-americans-increasingly-are-looking-for-second-passports/ https://www.seattletimes.com/business/rich-americans-increas...
  - Scarblac 6y ago
    Which is why the proposal is based on where time is spent, not what you're a citizen of.
    - daenz 6y ago
      Why does a wealthy citizen of another country have to physically spend 60 days in California? You're suggesting that the wording of the law is not trivial to circumvent, especially for people with large amounts of wealth.
      - jelliclesfarm 6y ago
        it's not like SF or NYC are tourists paradise. you cant walk down mission st without some random homeless person trying to attack you. Gavin Newsom and London Breed should just convert Moscone center into a homeless shelter. problem solved.
  - tafda 6y ago
    An EU passport is nice to have, doesn't look like he's moving out of California though: https://variety.com/2020/dirt/moguls/ex-google-ceo-eric-schmidt-buys-31-million-santa-barbara-mansion-1234765879/ https://variety.com/2020/dirt/moguls/ex-google-ceo-eric-schm...
  - 6y ago
WealthVsSurvive 6y ago
And when those countries do the same and desperate people follow them for vengeance the world over, where will they go then?
caymanjim 6y ago
While this proposed California law is unlikely to be Constitutional, there are federal laws that prevent people from simply leaving the country and taking all their money with them to avoid taxes. You can try, and with good lawyers and accountants, you can certainly shelter a lot of it, but in the end you can't avoid tax liability just by leaving. Plenty of uberrich get away with it, but it's still not legal. You can't even completely avoid it by renouncing your citizenship if you're a dual national; there's still a liability. I know that the uberrich get away with dodging taxes all the time, but there are potentially high costs, like having your assets confiscated, or having to hide out in your island fortress and never return to the US lest you end up in prison.
- deleted 6y ago
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ashconnor 6y ago
Begs the question why haven't they left already. Is there some sweet spot of taxation before the majority the people being taxed resort to capital flight?
- imoverclocked 6y ago
  How many people do you know that have left all of their bad relationships on day 1?
matthewdgreen 6y ago
The idea here is that it’s easy to find a safe, welcoming host nation with low taxes, and still be able to benefit from the functioning economies of the nations you left behind. However this is a pretty artificial system that only exists when there’s a lot of broadly-shared wealth and stability in the world. This kind of capital flight to the bottom is going to systematically undermine that stability. At the point where things start to seriously malfunction, nobody’s going to give a crap about a little bit of tax.
- Red_Leaves_Flyy 6y ago
  Seriously. When 10000 m/billionaires decide to flee the states they're going to have bigger problems to contend with. These people have spent so many decades ignoring the poor they won't know they're actually fucked until their mansion in Beverly hills is on fire.

elhudy 6y ago

The reason people resist such a tax is because there is no transparency into where the money is going. If there was traceability into putting that money towards positive social programs, for example, there might be less opposition. I couldn't find what the tax was supposed to go towards but I also didn't make it beyond the paywall.

graeme 6y ago
All taxes go into general revenues. Governments don’t operate by taxing one thing and spending it specifically on another. Gas tax is the most cited counterexample, but even there roads get money from general revenues.
- sojournerc 6y ago
  Another counterexample is recreational cannabis sales tax. In Colorado they are earmarked for education and arts afaik.
- elhudy 6y ago
  I understand that's how things currently are, but I don't believe it's how things need to be.
- zepto 6y ago
  Gas tax isn’t a counter example since the earmarks have exceptions that allow the money to be used for arbitrary other purposes, which in practice is the case.
zepto 6y ago
This! California had had a lot of tax revenue over the last couple of decades but doesn’t seem to have much to show for it. Where is the explanation for how the money was spent, why it hasn’t paid off, and what would be different? As far as I can tell it’s not ‘earmarked’ it’s just more tax for the general fund. Also, Earmarks have never been trustworthy so it wouldn’t matter even if it were earmarked.
- 6y ago

WillPostForFood 6y ago

because of 0.4% If California was well run, clean, and had otherwise lower tax, then .4% might be easy to ignore. But if you’re already on the fence, and not happy with things, and have been talking to real estate agents in Seattle, Austin, Miami, or Singapore, then this just the kick in the butt you might need to go through with leaving.

ericmay 6y ago
Singapore is a weird one to throw in there with the others in that list. Could you elaborate?
- chiph 6y ago
  Likely for people with Chinese heritage or relatives. It's clean, orderly, and it's super easy to start a business there.
  - medium_burrito 6y ago
    Like Switzerland, but for Chinese people (and tropical, friendlier, flatter and grimier).
carlio 6y ago
Local governance running well, public services like cleaning, helping homeless etc, all require tax dollars. Saying "I'd pay tax if they had enough money they get from tax to fix the problems that cause me not to want to pay tax" seems like it's a bit of a chicken-egg problem.
- nthj 6y ago
  This argument seems to make sense on the surface, but California already has some of the highest income taxes in the country. To make an appeal to extremes, if California had a 40% income tax they wanted to raise to 45% asking, “show me how you have demonstrated good stewardship in what you are already taking” would be, I imagine, somewhat common. Reasonable people can of course debate that percentage, and can do so today based on California already having high income taxes.

cltby 6y ago

HN commenters are up in arms when e.g. Google stakes a claim on the off-hours output of their current employees. They would be even more furious if Google asserted ownership of future income of former employees. And if Google further claimed a right to lifetime earnings of former employees... I can only imagine the tone here. It's unfortunate that HN brings out the champagne when governments take similar predatory actions. > that's a real sign of just how far American greed has gone Glib support of expropriation shows just how far American collectivism has gone. Naked envy and resentment hiding behind a fig leaf of public mindedness.

hpoe 6y ago

And for those of us that have seen this type of tax play out historically where "it's just 0.4% and just on the top 1%" and want to avoid being dragged down any farther?

api 6y ago

If California were well run, sure. Do something about the housing and homeless crisis and we’ll talk. California doesn’t have a money problem. They have a lack of political will problem and an incompetence (or corruption) problem. The state is held hostage by NIMBYs and is chronically unable to build infrastructure. Look at the high speed train disaster for an example of the latter. NIMBYs ensure that any money or effort put into the homeless problem is also wasted, as there is no affordable housing for these people to inhabit even if their mental health issues are dealt with. More money won’t fix these things. It will probably go into the pockets of the people who created these problems. Note that much of what I wrote applies to the USA broadly. We are taxed not much less than Canadians, but have the infrastructure and social services of a “developing” nation. Give me either low taxes at e.g. Costa Rica levels OR shiny infrastructure, free college for my kids, and universal healthcare. Oh wait Costa Rica has universal health care... We are great at setting money on fire in this country.

AsyncAwait 6y ago
> Do something about the housing and homeless crisis and we’ll talk You do realize a wealth tax is one way to bring in income to try to fix these problems right? You guys don't even have universal healthcare in the middle of a global pandemic. Laughably sad.
- cltby 6y ago
  There’s plenty of tax revenue to fund nearly all such priorities. It’s sadly squandered, in large part because voters have ideological commitments to confiscation, and no such commitments to effective government.
  - AsyncAwait 6y ago
    > in large part because voters have ideological commitments to confiscation, and no such commitments to effective government. I highly doubt it's that rather than the fact special interest are prioritized over 'effective government' in large parts due to some conservatives and neoliberals promoting the idea of corruption == freedom. When there's a thousand ways to legally bribe politicians, of course there's no incentive for effective government.

jandrewrogers 6y ago

The taxes from the "1930's-1970's" were not particularly high, that is a misunderstanding of how the structure of the tax code has changed. Net of deductions, taxation hasn't changed that much. You can't look at the nominal tax rates in isolation while ignoring the scope of deduction against those rates. Eliminating deductions for high-income earners while reducing tax rates on that income is revenue neutral, and generally preferable as a policy.

csa 6y ago
Thank you for pointing this out. Many people, especially at HN for some reason, don’t realize that the Tax Reform Act of 1986 made tax rates more transparent which is why the “sticker rate” was lower. Interestingly, the former tax rates often times screwed the middle class much more, because they couldn’t afford an accountant and/or engage in the wide range of financial maneuvers that could substantially reduce one’s tax burden. No higher earner ever paid sticker price tax rates when they were that high. Source: My mother. She has been a tax accountant since the 70s. The Tax Reform Act changed the field considerably.
wingspar 6y ago
Yes, pre 1986 tax reform, personal credit card interest was deductible for any purchase. Crazy times... https://turbotax.intuit.com/tax-tips/small-business-taxes/is-interest-on-credit-cards-tax-deductible/L3TlLAaoI https://turbotax.intuit.com/tax-tips/small-business-taxes/is...
Meekro 6y ago
The evidence for this is that federal tax revenue as a percentage of GDP has been 15-20% since World War 2. Massive swings in tax policy have not changed this number, proving that those policy changes were more restructurings than tax cuts. https://en.wikipedia.org/wiki/Hauser%27s_law https://en.wikipedia.org/wiki/Hauser%27s_law

bassman9000 6y ago

because of 0.4% It's not because of a .4. As you said, barely anyone will pay it. And still people are leaving. It's because it's now a fact: That California politicians are unable to spend wisely. That California politicians have great appetite for raising taxes, and inventing new ones. So it's not a .4 that drives people out. It's because they know what's next.

afpx 6y ago

There's always going to be a demand for California. It's a unique country - the vibe, the culture, the creativity, the beauty. It's one of the best places in the world to start a creative business because of the raw talent that's available. People will continue to flock there, regardless of the taxes, especially in a post-scarcity world. It's good for Californians to enforce their values. They'll keep their country unique, while the rest of the world homogenizes into a capitalist dystopia.

ulfw 6y ago
It is not a country. As much as you like it to be one.

ellyagg 6y ago

Ah, yes, threatening to murder people you're jealous of. This is the content I come to Hacker News for!

iaHN 6y ago
The underlying counterargument is that tax dodging is a form of violence against the poor.
- cltby 6y ago
  Rich guy: “Mind keeping your hands off my stuff?” Confiscationist: “he’s attacking me!”
  - iaHN 6y ago
    The underlying counterargument was that it was never completely "your stuff" to begin with.
    - Red_Leaves_Flyy 6y ago
      Background reading: https://en.m.wikipedia.org/wiki/Wage_slavery https://en.m.wikipedia.org/wiki/Wage_slavery
    - daenz 6y ago
      And we should leave the allocation of who is allowed to own how much stuff to who exactly? Politicians? Your average person on the street? Who are those economic geniuses who will distribute everything with objective correctness? That is the alternative that it sounds like you are promoting.
      - damnyou 6y ago
        I share your concerns about centralized management, which is why the money should be redistributed in the form of a UBI to enable decentralized decision-making.

deleted 6y ago

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annexrichmond 6y ago

Once the infrastructure is in place to assess this kind of tax, it'll be a matter of time before it starts applying to those with >10M wealth, then >1M, etc

mgolawala 6y ago
Yup. It's called boiling the frog. I am not totally against wealth taxes, however I disagree with the approach. What I do not understand is why not just implement a more aggressive estate tax on people and close the "trust" and "foundation" loopholes for avoiding the estate tax. Let's take Jeff Bezos as an extreme example (who isn't even a California Resident). At least until we figure out immortality, Jeff Bezos will die someday. Let him enjoy the wealth that he has earned by creating a company that has benefited society as a whole. When he dies, his wealth should return to the society from which it came. He was rewarded for his work/ingenuity/effort during his life, and now that he is gone, society reclaims the rewards it had given him. What is wrong with that? The way I see it, once you are dead you don't get a vote, and you don't get a say in the affairs of the world so you shouldn't be able to direct that wealth through any kind of inheritance, foundation or trust. His children have done nothing to earn or create that wealth themselves so why should they deserve any of it? They will have the same opportunities to create and earn wealth that he did, and they will benefit from the society he contributed to. If they are able to build equivalent wealth via another Amazon.. Great! They earned it! if not that is fine too. You want to help your kids? Teach them how to fish for themselves instead of giving them an unlimited supply of fish. Passing down wealth from generation to generation or directing wealth long after you are dead through foundations and trusts is directly opposed to any effort to give "equality of opportunity" for future generations.
- antisthenes 6y ago
  > When he dies, his wealth should return to the society from which it came. Sorry, but this stance is outright ignorant. What do you mean return to society ? His wealth is Amazon, the company, dozens of warehouses and an incredible logistics chain. His wealth currently provides a pretty damn good service to society, in the form of being able to get items delivered fairly quickly and contact-less in the time of a pandemic. Are you proposing we take his Amazon holdings after his death and give every person in the county a fractional share? Or however many shares it comes out to? That's certainly a possibility, but the realistic outcome of that is that most people try to sell their shares for cash right away, thereby crashing the price, and most shares ending up in institutional investment banks and funds within the first year. I'm not against a stronger estate tax either, but you have to be real careful when you're trying to divvy up massive amounts of wealth on a short time scale and think of the second order effects.

entee 6y ago

Thing is we’ve done the experiment and it doesn’t work. France had a wealth tax (called the ISF, impôt sur la fortune) and it never actually garnered the expected revenues. This is because wealthy French people moved to Brussels, where you still have a pretty nice city and you can still speak French. Macron got rid of it and there was a mini-crash in Brussels real estate as people move back. There’s nothing stopping me or anyone in CA to move to CO or UT or TX. Sure I’m further from the ocean but those are still pretty nice places to live. I love CA and I’m very far from the $30M threshold, but if I did have this sort of tax it’s hard to justify not moving for lower taxes AND cheaper cost of living with very little downside. With the rise of remote work, there’s even less of a downside.

daveFNbuck 6y ago
I think that's why they put in the provision that you have to keep paying the tax for 10 years after you move.
- AnthonyMouse 6y ago
  That's probably the stupidest part of it, because then you convince all the people who imagine they're going to be Elon Musk in ten years that they should leave California immediately.
  - ip26 6y ago
    The interesting part is the next question you have to ask yourself- could Elon have built what he did somewhere else?
    - ishjoh 6y ago
      VCs prefer investing in companies in NYC and the Valley. So Paypal would have probably had to be built in one of those two markets. Once he had a successful company, I suspect he could have gone elsewhere and still received investment and convinced enough talented people to come join his projects. So I think for Elon in particular the answer is yes, but there might have only been a single other place he could have started in the USA, and we're specifically talking about Elon.

yowlingcat 6y ago

> that's a real sign of just how far American greed has gone. I find that a hard statement to square with the founding principles of American culture. The USA was a country that declared independence and fought a war over taxation. The colonies as a whole were a magnet for opportunistic pioneers -- in fact, for much of history, "opportunistic pioneer" (for better or worse) was and is what people think of when they think of American. So while you're correct that it is a certain kind of greed and self-interest, where I can't understand what you're trying to say is "how far X has gone." What does how far mean? The greed has been at this level since nation's conception. And ostensibly, it was the whole /point/ of the nation.

T-hawk 6y ago

> If you're going to move where you live or significantly alter where you spend you time because of 0.4% of things above 30M, that's a real sign of just how far American greed has gone. I would say this isn't any different than any other greed at any other place or time. It's simply a cost-benefit tradeoff decision. If people perceive that being in California makes more money than the wealth tax costs, they will stay. If not, they will leave. There doesn't have to be any moral or principled component to this, just simple self-interest. Also don't overlook the deterrence factor. The wealthy currently in CA may stay there if moving represents a greater overall cost. But anyone not currently in CA would have a great disincentive to never move there.

runarberg 6y ago
Economists love to believe that humans are rational actors, even though it has been shown again and again in experimental settings that only a minority acts in an economical rational way. Economical self interest is a really poor predictor of behavior

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klipt 6y ago

Do you think California will never raise it above 0.4%? This is just a test, if it gets them money it'll surely go much higher. This is a bandaid over Prop 13. We should tax land more instead of having high income taxes, economists agree the land value tax is the most efficient tax.

jseliger 6y ago

California will do absolutely anything to raise revenue except repeal Prop 13. https://www.mcsweeneys.net/articles/i-will-do-anything-to-end-homelessness-except-build-more-homes https://www.mcsweeneys.net/articles/i-will-do-anything-to-en...

yunesj 6y ago

> because of 0.4% ... American greed San Francisco has a city budget larger than most other countries. This election, it voted to pass all nine measures for new taxes! https://sfelections.sfgov.org/november-3-2020-election-results-summary https://sfelections.sfgov.org/november-3-2020-election-resul...

proc0 6y ago

It's never just about the immediate target and/or accounting of the numbers. The problem with going after the rich is that it's setting up a system for this type of control. Government leaders (especially the ones in CA) constantly abuse control, and giving them more points of control makes no sense. One year is a minority being targeted (just not if it's racial, gender etc), the next it will be some large group of people, maybe middle class, maybe small business owners, and they will extend such nonsense to a larger group. These laws have to matter in principle because it is much easier to extend their power then to weaken them or even harder, undo them.

mrtweetyhack 6y ago

So you're OK with it because it doesn't affect you?

csomar 6y ago

> 1930's-1970's The difference, however, is that today's rich people can easily move their residence, and with remote-work; maybe their companies. In the old times, it was not quite easy to move to another country. I can imagine the difficulties (selling your assets, taking your fortune, figuring out the new kingdom, wars and instability, etc...). This is no longer an issue with city-states like Dubai or Panama; and the fact that your wealth is floating online on some stocks, banks, bitcoin, derivatives, or real-estate scattered around the world. This doesn't concern the average joe, however. Which is why he continues to carry most of the tax bill and is cash-strapped. California issue, however, is not the rich are greedy; but that its government is corrupt and inefficient. Raising taxes doesn't help but only grow the corrupt bureaucracy.

nullc 6y ago

> When people are getting 5-6% returns on investments (minimum) The 99th percentile wealth vs 99th percentile taxable income suggests that many very wealthy people are making lower returns in fact. If people are generating those returns, however, there is no need for a wealth tax: the returns are already taxed (and could be taxed at a higher rate without a whole new invasive tax regime).

phkahler 6y ago

>> Not to mention that it's almost certain no one here will ever be touched by this tax. What? Y-combinator takes in lots of people for more than 60 days and they're on track to make a lot of money given the success rate of YC startups. >> When people are getting 5-6% returns on investments (minimum), 0.4% is still not even stopping the rich get richer effect. How is that relevant to taxing people who dont live there?

yibg 6y ago

But 5-6% isn’t guaranteed, while the tax is most certainly guaranteed. For extremely safe investments the yield is what? 1.5% even on long term investments?