6 ms·

I think it's an interesting idea, and not a terribly poor on the face of it. Unfortunately, for us non-uber-rich people, uber-rich people have a lot of money t

by gen220 6y ago

I think it's an interesting idea, and not a terribly poor on the face of it. Unfortunately, for us non-uber-rich people, uber-rich people have a lot of money to hire people to help them "avoid" taxes, under the euphemism of "minimizing tax burdens". I think we'd probably need to address that first, by simplifying the US tax code (perhaps making it X% full stop, across the board, no loopholes, applied to all income earned beyond Y/year), before experimenting with such a strategy. Of course, there will still be some sleazy people hiding their wealth (and income) behind personally-directed "non-profits" and "charities". But, these are probably easier to litigate than the corporations those people work at/for.

dylan604 6y ago
> perhaps making it X% full stop, across the board, no loopholes, applied to all income earned beyond Y/year This has been floated for some time, usually followed by a discussion of a sales tax increase. However, the groups floating these ideas tends to be the more fringe types, so they are almost always dismissed out of hand.
- gen220 6y ago
  I think it'd be popular among citizens who make under Y/year. You can make Y arbitrarily high, like $10m/year, and make X quite reasonable, like 30%. Stepping back, to look at whether such a tax would be useful. The chief risk that thinktanky-people raise is that there are many desirable countries to live in, which don't levy taxes as such. So you'd get a lot of assets fleeing $TAXING_COUNTRY, which, the argument goes, would have a deleterious impact on people inside that country. In practice, most income of these people is not circulated in the American economy, but immediately invested into "stationary" assets, such as securities issued by US Corporations or the Treasury. Regardless of where these people live or hold citizenship, much of that stationary income will continue to be invested in the US, where real growth rates have historically been sustainably-high. (a simultaneous tax on US-held-wealth, not income, would throw a big wrench into this argument!) In addition, I doubt many people would actually give up their American citizenship to avoid this tax (simply having a residence abroad would not be enough to escape this tax, if you're a citizen, since our country taxes citizens living abroad). IMO, most of the people who would give up citizenship to avoid a mandatory income tax, would have already given up (or avoided obtaining) their American citizenship anyways, because of the tax implications that exist today. --- This talk of emigration reminds me of a fun thought experiment. I remember reading some argument whose thesis was, roughly, "one reason the US is able to accrue so much debt, well past the reasonable point of leverage for the average country, is because the US is the only nation with sufficiently-international tax-collecting, finance-monitoring, and military potential to effectively implement a wealth tax". From the buyer's perspective, Country X can buy our debt, essentially as a securitization of a future wealth tax against the US. Furthermore, this effectively doubles as insurance against wealthy emigres leaving your country, since most of them take their assets to the US when they go! This means that the likelihood of US Debt being paid back is extremely high, even past the normal metrics of over-leverage (debt as a % of GDP). To avoid a hypothetical tax on wealth generated in the US since the 1940s, you'd need to move yourself and your assets to a location outside the combined military+financial influence of the USA, that is willing to take your now-contraband, non-USD assets. Any USD assets held by most banks would be de facto seized. Presently, maybe North Korea and Iran fit this bill. Russia, to a lesser extent, but this is a roll of the dice. Not the best places to peg a long-term future on. It's possible to imagine China (and the countries under its sphere of Belt+Road influence) fitting into this category one day, which would be interesting and probably invoke a war. One interesting feature of this lens, is that the US shouldn't ever need to implement a wealth tax to justify the borrowing ability, the US simply needs to make it clear that such a tax would be possible to levy, if absolutely necessary. Another interesting implication is that, if the US should ever lose its power to levy this tax (due to a sharp decline in military, economic, or financial policy strength), the US's ability to borrow way above our annual-GDP could evaporate overnight: causing all kinds of mayhem, probably.
rcpt 6y ago
Really wish land value taxes were politically viable. Impossible to hide land and no matter how much you tax it the amount doesn't change.
- pharke 6y ago
  I don't think that would work in the long run either. If it becomes expensive to own a lot of land due to taxes then the simple solution is to not own land and it's easy to implement as there is no requirement to hold land as an asset, it's only a convenient store of wealth at the moment. The minute it becomes inconvenient you would see the wealthy divest their ownership of land in favour of some other asset with less tax burden.
  - skluug 6y ago
    Divest how? By selling? To who?
    - pharke 6y ago
      Someone who wants to rent it out for a profit. Someone who wants to redevelop it as a business. The value of real estate would probably take a big hit with a tax hike like the one proposed as owners move to liquidate so there would be a glut of properties at first but it would eventually find a price for each that is acceptable to buyers. Haven't you ever wondered how beautiful, historic residences in prime urban locations got turned into apartments and condos?
  - filoleg 6y ago
    >The minute it becomes inconvenient you would see the wealthy divest their ownership of land in favour of some other asset with less tax burden. Wouldn't that be a "win" situation as well? Because at least it will reduce the incentive to go all NIMBY on new denser development, which seems to be the main blocker when it comes to housing pricing (and, consequentially, ownership/renting). Unless I misunderstood what you said, it seems like you are saying that this policy won't completely solve the issue. But it would make it at least better, while, at the same time, making "property as a store of wealth" less viable. Which would (in my estimation) make housing cheaper (directly) just due to people not hoarding the land anymore and (indirectly) due to decreased NIMBYism blocking denser housing developments. So while it might not be a win-win-win, situation, it could definitely be a win-win situation. Or at least a singular win situation without much losses or negatives attached to it (at least as far as I am seeing this, which could definitely be wrong; in which case, please correct me, as I am thinking through this as I am going; I am far from being the expert on the situation).

by gen220 6y ago

dylan604 6y ago

> perhaps making it X% full stop, across the board, no loopholes, applied to all income earned beyond Y/year This has been floated for some time, usually followed by a discussion of a sales tax increase. However, the groups floating these ideas tends to be the more fringe types, so they are almost always dismissed out of hand.

gen220 6y ago
I think it'd be popular among citizens who make under Y/year. You can make Y arbitrarily high, like $10m/year, and make X quite reasonable, like 30%. Stepping back, to look at whether such a tax would be useful. The chief risk that thinktanky-people raise is that there are many desirable countries to live in, which don't levy taxes as such. So you'd get a lot of assets fleeing $TAXING_COUNTRY, which, the argument goes, would have a deleterious impact on people inside that country. In practice, most income of these people is not circulated in the American economy, but immediately invested into "stationary" assets, such as securities issued by US Corporations or the Treasury. Regardless of where these people live or hold citizenship, much of that stationary income will continue to be invested in the US, where real growth rates have historically been sustainably-high. (a simultaneous tax on US-held-wealth, not income, would throw a big wrench into this argument!) In addition, I doubt many people would actually give up their American citizenship to avoid this tax (simply having a residence abroad would not be enough to escape this tax, if you're a citizen, since our country taxes citizens living abroad). IMO, most of the people who would give up citizenship to avoid a mandatory income tax, would have already given up (or avoided obtaining) their American citizenship anyways, because of the tax implications that exist today. --- This talk of emigration reminds me of a fun thought experiment. I remember reading some argument whose thesis was, roughly, "one reason the US is able to accrue so much debt, well past the reasonable point of leverage for the average country, is because the US is the only nation with sufficiently-international tax-collecting, finance-monitoring, and military potential to effectively implement a wealth tax". From the buyer's perspective, Country X can buy our debt, essentially as a securitization of a future wealth tax against the US. Furthermore, this effectively doubles as insurance against wealthy emigres leaving your country, since most of them take their assets to the US when they go! This means that the likelihood of US Debt being paid back is extremely high, even past the normal metrics of over-leverage (debt as a % of GDP). To avoid a hypothetical tax on wealth generated in the US since the 1940s, you'd need to move yourself and your assets to a location outside the combined military+financial influence of the USA, that is willing to take your now-contraband, non-USD assets. Any USD assets held by most banks would be de facto seized. Presently, maybe North Korea and Iran fit this bill. Russia, to a lesser extent, but this is a roll of the dice. Not the best places to peg a long-term future on. It's possible to imagine China (and the countries under its sphere of Belt+Road influence) fitting into this category one day, which would be interesting and probably invoke a war. One interesting feature of this lens, is that the US shouldn't ever need to implement a wealth tax to justify the borrowing ability, the US simply needs to make it clear that such a tax would be possible to levy, if absolutely necessary. Another interesting implication is that, if the US should ever lose its power to levy this tax (due to a sharp decline in military, economic, or financial policy strength), the US's ability to borrow way above our annual-GDP could evaporate overnight: causing all kinds of mayhem, probably.

rcpt 6y ago

Really wish land value taxes were politically viable. Impossible to hide land and no matter how much you tax it the amount doesn't change.

pharke 6y ago
I don't think that would work in the long run either. If it becomes expensive to own a lot of land due to taxes then the simple solution is to not own land and it's easy to implement as there is no requirement to hold land as an asset, it's only a convenient store of wealth at the moment. The minute it becomes inconvenient you would see the wealthy divest their ownership of land in favour of some other asset with less tax burden.
- skluug 6y ago
  Divest how? By selling? To who?
  - pharke 6y ago
    Someone who wants to rent it out for a profit. Someone who wants to redevelop it as a business. The value of real estate would probably take a big hit with a tax hike like the one proposed as owners move to liquidate so there would be a glut of properties at first but it would eventually find a price for each that is acceptable to buyers. Haven't you ever wondered how beautiful, historic residences in prime urban locations got turned into apartments and condos?
- filoleg 6y ago
  >The minute it becomes inconvenient you would see the wealthy divest their ownership of land in favour of some other asset with less tax burden. Wouldn't that be a "win" situation as well? Because at least it will reduce the incentive to go all NIMBY on new denser development, which seems to be the main blocker when it comes to housing pricing (and, consequentially, ownership/renting). Unless I misunderstood what you said, it seems like you are saying that this policy won't completely solve the issue. But it would make it at least better, while, at the same time, making "property as a store of wealth" less viable. Which would (in my estimation) make housing cheaper (directly) just due to people not hoarding the land anymore and (indirectly) due to decreased NIMBYism blocking denser housing developments. So while it might not be a win-win-win, situation, it could definitely be a win-win situation. Or at least a singular win situation without much losses or negatives attached to it (at least as far as I am seeing this, which could definitely be wrong; in which case, please correct me, as I am thinking through this as I am going; I am far from being the expert on the situation).