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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

by 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.
    - syshum 6y ago
      This is where my libertarianism come roaring to the fore. To me one of the most dangerous arguments for a public policy is "for the greater good" so much misery and suffering has been inflicted on society by groups and policies based on "the greater good" Further your position requires one to assume the government will inherently spend the money better than allowing a person to keep the money to invest in a business or blow it on expensive cars yachts (and yes even though things are a net good for society) , your scenario of 100million just vanishing is not realistic as people will move investments in response to losses like that. We can however look at history and see clearly that government does not always spend money wisely Just look at this comment thread for the cognitive dissonance the surrounds government spending. People asking for CA to justify more taxation in the face of their failure of public policy are simply meet with arguments that even more money will solve the problems You see government programs are never bad, and never fail because they are bad policy, it ALWAYS because we did not tax or spend enough, no matter how many times this pattern is repeated it is never enough. They could steal 100% of all wealth over 30 Million, and when the problems are not resolved (and they wont be) the supporters of the programs will demand more money, say taking all wealth over 20, then 10, then... Remember the original income/wealth tax only applied to the top 3% of incomes now it applies to 50%... Government taxation on income only ever expands, that is the big problem here.
throwaway2245 6y ago
No - the Dutch tax is a fixed amount based on your total holding on January 1st. Your taxable amount on €100,000,000 is (approximately) 1.6% of the total, not of the gain. You would pay €1,600,000. This does replace capital gains (I'm not sure to what extent): it is presented as an assumption that you will gain a fixed amount of [edited: 5.28%].
- bouk 6y ago
  There are no capital gains for personal holdings in the NL. So as long as your year over year gains are higher than 4% you're ahead. For example if you double your money with Bitcoin you still pay 1.6%
- syshum 6y ago
  Do you have a source showing how that is what happens? This site[1] seems to refute your assertion [1]https://firetheboss.eu/personal-finance/dutch-wealth-tax/ https://firetheboss.eu/personal-finance/dutch-wealth-tax/
  - throwaway2245 6y ago
    I think the site agrees with me but you are misreading it, maybe? Could you be more specific? For example, the main table has a column "Tax as % of Wealth"

by syshum 6y ago

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.
  - syshum 6y ago
    This is where my libertarianism come roaring to the fore. To me one of the most dangerous arguments for a public policy is "for the greater good" so much misery and suffering has been inflicted on society by groups and policies based on "the greater good" Further your position requires one to assume the government will inherently spend the money better than allowing a person to keep the money to invest in a business or blow it on expensive cars yachts (and yes even though things are a net good for society) , your scenario of 100million just vanishing is not realistic as people will move investments in response to losses like that. We can however look at history and see clearly that government does not always spend money wisely Just look at this comment thread for the cognitive dissonance the surrounds government spending. People asking for CA to justify more taxation in the face of their failure of public policy are simply meet with arguments that even more money will solve the problems You see government programs are never bad, and never fail because they are bad policy, it ALWAYS because we did not tax or spend enough, no matter how many times this pattern is repeated it is never enough. They could steal 100% of all wealth over 30 Million, and when the problems are not resolved (and they wont be) the supporters of the programs will demand more money, say taking all wealth over 20, then 10, then... Remember the original income/wealth tax only applied to the top 3% of incomes now it applies to 50%... Government taxation on income only ever expands, that is the big problem here.

throwaway2245 6y ago

No - the Dutch tax is a fixed amount based on your total holding on January 1st. Your taxable amount on €100,000,000 is (approximately) 1.6% of the total, not of the gain. You would pay €1,600,000. This does replace capital gains (I'm not sure to what extent): it is presented as an assumption that you will gain a fixed amount of [edited: 5.28%].

bouk 6y ago
There are no capital gains for personal holdings in the NL. So as long as your year over year gains are higher than 4% you're ahead. For example if you double your money with Bitcoin you still pay 1.6%
syshum 6y ago
Do you have a source showing how that is what happens? This site[1] seems to refute your assertion [1]https://firetheboss.eu/personal-finance/dutch-wealth-tax/ https://firetheboss.eu/personal-finance/dutch-wealth-tax/
- throwaway2245 6y ago
  I think the site agrees with me but you are misreading it, maybe? Could you be more specific? For example, the main table has a column "Tax as % of Wealth"