4 ms·

Capital gains taxes are already a thing. You just pay on liquidation instead of having to come up with cash every year.

sdenton4 6y ago
First, let's recognize that this is a completely made-up criteria for when to apply the tax, then: there's no "natural" ethical principle for why it's ok to tax at liquidation vs tax continuously. The question, then, is whether one method is actually better than another under some set of criteria. The original comment's 'I don't feel like it' is insufficient in my mind. The reality of the current system is that we have absolutely enormous wealth bubbles hidden away basically forever. Once you're a billionaire, there's no REAL need to liquidate things on a regular basis. You'll tend to store the vast majority of that wealth in things that appreciate (because you have the choice, and no one needs that many cars, even you), so the bubble grows continuously. Then conversions will mostly happen at carefully judged points in time+method to minimize tax owed. A wealth tax puts some small check on the runaway growth of assets, and provides a more steady+predictable income stream for governments. Finally, I would like to reinforce that the 'you' used in all of these comments almost certainly include only "temporarily embarrassed" billionaires. Common sense household economics have near-zero relevance for thinking about wealth on the scales we should be concerned with here. Actual billionaires should have no trouble coming up with cash for a wealth tax: beyond some point, the wealth is a mostly undifferentiated mass of assets. If 'you' can project what 'you' owe for the tax, 'you' know how much you need to liquidate to pay it.
- truckerbill 6y ago
  This is the only clear reasoning in the entire thread chain.
- ericd 6y ago
  Are you familiar with the history of AMT? When it was enacted, it was meant to target an extremely small set of households, on the order of 1,000 iirc. But the thresholds weren’t indexed to inflation, and so now it triggers on a huge number of people every year. Maybe we are all temporarily embarrassed billionaires ;-).
  - sdenton4 6y ago
    Seems like you suggest one solution directly in the comment? Another: explicitly cap the percentage of people taxed by the law.
    - ericd 6y ago
      I do, but these things never seem to be indexed to inflation. Perhaps they don’t want to overtly politicize how we calculate inflation?

First, let's recognize that this is a completely made-up criteria for when to apply the tax, then: there's no "natural" ethical principle for why it's ok to tax at liquidation vs tax continuously. The question, then, is whether one method is actually better than another under some set of criteria. The original comment's 'I don't feel like it' is insufficient in my mind. The reality of the current system is that we have absolutely enormous wealth bubbles hidden away basically forever. Once you're a billionaire, there's no REAL need to liquidate things on a regular basis. You'll tend to store the vast majority of that wealth in things that appreciate (because you have the choice, and no one needs that many cars, even you), so the bubble grows continuously. Then conversions will mostly happen at carefully judged points in time+method to minimize tax owed. A wealth tax puts some small check on the runaway growth of assets, and provides a more steady+predictable income stream for governments. Finally, I would like to reinforce that the 'you' used in all of these comments almost certainly include only "temporarily embarrassed" billionaires. Common sense household economics have near-zero relevance for thinking about wealth on the scales we should be concerned with here. Actual billionaires should have no trouble coming up with cash for a wealth tax: beyond some point, the wealth is a mostly undifferentiated mass of assets. If 'you' can project what 'you' owe for the tax, 'you' know how much you need to liquidate to pay it.

truckerbill 6y ago
This is the only clear reasoning in the entire thread chain.
ericd 6y ago
Are you familiar with the history of AMT? When it was enacted, it was meant to target an extremely small set of households, on the order of 1,000 iirc. But the thresholds weren’t indexed to inflation, and so now it triggers on a huge number of people every year. Maybe we are all temporarily embarrassed billionaires ;-).
- sdenton4 6y ago
  Seems like you suggest one solution directly in the comment? Another: explicitly cap the percentage of people taxed by the law.
  - ericd 6y ago
    I do, but these things never seem to be indexed to inflation. Perhaps they don’t want to overtly politicize how we calculate inflation?