3 ms·

1) For assets hard to value, the owner would have to declare the value of the painting. They would pay taxes on that declared value. To prevent the value from b

1) For assets hard to value, the owner would have to declare the value of the painting. They would pay taxes on that declared value. To prevent the value from being too low, anyone would also have the ability to purchase that asset at the declared value.

jandrewrogers 6y ago
You clearly haven’t thought through the implications of that policy. It is literally forcing the owner to write a call option against their asset that anyone can exercise and without the owner receiving a risk premium. Speculators and arbitrageurs would make a fortune acquiring these assets if the call option was written at fair market value. It would be like r/wallstreetbets but with everyone’s private property. That will end well.
- throwaway2245 6y ago
  > if the call option was written at fair market value. There are several solutions to this hypothetical problem. The parent said the owner decides the value of their premium item. The owner is claiming indifference as to whether it is sold at their chosen value or not. If that's only fair market value (in the rest of the market), the owner is indifferent to owning the asset at all and is just inadvertently hoarding it. The economy works better for everyone if the owner is encouraged to sell to whoever values it most highly. If the call option is called in (above the owner's valuation plus costs), an auction could be triggered, avoiding the arbitrage of first dibs. Overall, this is a hair on the back of a nit. The law should be that you pay tax on your global wealth - avoiding and evading tax is already a choice that people make. It's nothing new.
- tylerhou 6y ago
  > You clearly haven’t thought through the implications of that policy. This isn't my idea; this is an idea proposed by an economist and a lawyer, who have both thought through the implications of such a policy. https://press.princeton.edu/books/hardcover/9780691177502/radical-markets https://press.princeton.edu/books/hardcover/9780691177502/ra...
  - jandrewrogers 6y ago
    But they haven't thought through the implications. As far as I can tell, they ignore the implications of optionality which has mature mathematical frameworks for reasoning about such things. That's like making a Newtonian argument in a relativistic universe. People will analyze it in terms of options calculus even if the authors didn't -- I know I would. I'd like to see an argument explicitly from the calculus of option theory, which is the operative mathematics here. I am not saying that a compelling supportive argument does not exist, just that a credible argument must be presented in these terms because that is the central mechanic. Maybe there are some subtle arguments that make it a good idea in this context but on the surface it is quite apparently a really bad idea with a lot of literature to support that impression.
Zak 6y ago
I believe where schemes along those lines have actually been implemented, only the government has the option to purchase the asset at the declared value. That has less potential for abuse, I think.

jandrewrogers 6y ago

You clearly haven’t thought through the implications of that policy. It is literally forcing the owner to write a call option against their asset that anyone can exercise and without the owner receiving a risk premium. Speculators and arbitrageurs would make a fortune acquiring these assets if the call option was written at fair market value. It would be like r/wallstreetbets but with everyone’s private property. That will end well.

throwaway2245 6y ago
> if the call option was written at fair market value. There are several solutions to this hypothetical problem. The parent said the owner decides the value of their premium item. The owner is claiming indifference as to whether it is sold at their chosen value or not. If that's only fair market value (in the rest of the market), the owner is indifferent to owning the asset at all and is just inadvertently hoarding it. The economy works better for everyone if the owner is encouraged to sell to whoever values it most highly. If the call option is called in (above the owner's valuation plus costs), an auction could be triggered, avoiding the arbitrage of first dibs. Overall, this is a hair on the back of a nit. The law should be that you pay tax on your global wealth - avoiding and evading tax is already a choice that people make. It's nothing new.
tylerhou 6y ago
> You clearly haven’t thought through the implications of that policy. This isn't my idea; this is an idea proposed by an economist and a lawyer, who have both thought through the implications of such a policy. https://press.princeton.edu/books/hardcover/9780691177502/radical-markets https://press.princeton.edu/books/hardcover/9780691177502/ra...
- jandrewrogers 6y ago
  But they haven't thought through the implications. As far as I can tell, they ignore the implications of optionality which has mature mathematical frameworks for reasoning about such things. That's like making a Newtonian argument in a relativistic universe. People will analyze it in terms of options calculus even if the authors didn't -- I know I would. I'd like to see an argument explicitly from the calculus of option theory, which is the operative mathematics here. I am not saying that a compelling supportive argument does not exist, just that a credible argument must be presented in these terms because that is the central mechanic. Maybe there are some subtle arguments that make it a good idea in this context but on the surface it is quite apparently a really bad idea with a lot of literature to support that impression.

Zak 6y ago

I believe where schemes along those lines have actually been implemented, only the government has the option to purchase the asset at the declared value. That has less potential for abuse, I think.