4 ms·

That's buying a new house every 50 years. That's re-building all of the wealth your family spent generations accumulating, every 50 years. That's a direct disi

by MikeUt 5y ago

That's buying a new house every 50 years. That's re-building all of the wealth your family spent generations accumulating, every 50 years. That's a direct disincentive to saving money and frugality - the more you save, the bigger your tax gets, while your income stays the same.

pjc50 5y ago
> re-building all of the wealth your family spent generations accumulating, every 50 years. Correct, that's the point. > the more you save, the bigger your tax gets, while your income stays the same. Only if you're a completely useless investor. Most people's income increases as their wealth increases. That's part of the problem. Especially the "r > g" question: are you growing the pie or simply sitting on a larger share? On the other hand, this can and should be irrelevant to the average family. Start the wealth tax at $1m, say.
- literallycancer 5y ago
  Have you actually checked what's available in places like LA for $1m?
  - pjc50 5y ago
    I hadn't, because the precise value doesn't matter, but from here it looks like that's above the median: https://www.zillow.com/los-angeles-ca/home-values/ https://www.zillow.com/los-angeles-ca/home-values/ (I was also assuming it would operate like income tax allowances, where you deduct the $1m first and then apply the percentage to the remainder; and we should also consider families, so you could co-own a $2m home without hitting that limit) The question of which inflation measure the number should keep pace with might be more important in the long term...
- MikeUt 5y ago
  > Most people's income increases as their wealth increases. That's part of the problem. But that's already solved by taxing income.
SamBam 5y ago
> the more you save, the bigger your tax gets And the more you save, the more the returns on your money are. Wealth grows much faster than the tax. If you have over $50 million (which is the target of this tax), or even if you have $5 million, you're not putting this in a savings account. Even just sticking it in an index fund and forgetting about it generates 8%, and has done so for decades.
- MikeUt 5y ago
  But as I pointed out in my other comment, those returns are already taxed. If you think those returns are excessive, the solution is to raise the tax on them, not introduce an entirely different type of tax, with plenty of collateral damage.
  - vekker 5y ago
    Exactly, that's also what I try to point out to people: there are already tax mechanisms in place. Just raise tax rates if that's the goal. It seems to me with a wealth tax they just want to force everyone to work & spend forever, except for the ultra rich who can afford it and who have the means to hide most of their capital offshore. It would be a devastating blow to the FIRE movement, where normal people have the goal the accumulate enough resources & invest them wisely so they and their family can "retire" early.
    - SamBam 5y ago
      How many members of the FIRE movement have saved away $50 million? Remind me, is that "lean FIRE" or "fat FIRE?"
TheCoelacanth 5y ago
> That's re-building all of the wealth your family spent generations accumulating, every 50 years. Only if you assume a 0% rate-of-return on your family's wealth. With a realistic assumption about rate-of-return, your wealth will never deplete because of a 2% wealth tax. It will simply grow more slowly.
- MikeUt 5y ago
  You can't invest a family farm, or a painting. I will repeat myself a 3rd time - if the goal is to slow the growth of wealth, the right course of action is to raise the tax rate on the returns to that wealth. If you tax wealth itself, you're needlessly relying on the investability of said wealth, as well as on market returns.
  - TheCoelacanth 5y ago
    Family farms produce income and are rarely large enough to hit the threshold for these proposed taxes. As for case of non-income generating wealth, too bad. If you can't manage to generate the absolutely pathetically low returns (2%!) that would be needed, then you don't deserve to be rich forever.

by MikeUt 5y ago

pjc50 5y ago

> re-building all of the wealth your family spent generations accumulating, every 50 years. Correct, that's the point. > the more you save, the bigger your tax gets, while your income stays the same. Only if you're a completely useless investor. Most people's income increases as their wealth increases. That's part of the problem. Especially the "r > g" question: are you growing the pie or simply sitting on a larger share? On the other hand, this can and should be irrelevant to the average family. Start the wealth tax at $1m, say.

literallycancer 5y ago
Have you actually checked what's available in places like LA for $1m?
- pjc50 5y ago
  I hadn't, because the precise value doesn't matter, but from here it looks like that's above the median: https://www.zillow.com/los-angeles-ca/home-values/ https://www.zillow.com/los-angeles-ca/home-values/ (I was also assuming it would operate like income tax allowances, where you deduct the $1m first and then apply the percentage to the remainder; and we should also consider families, so you could co-own a $2m home without hitting that limit) The question of which inflation measure the number should keep pace with might be more important in the long term...
MikeUt 5y ago
> Most people's income increases as their wealth increases. That's part of the problem. But that's already solved by taxing income.

SamBam 5y ago

> the more you save, the bigger your tax gets And the more you save, the more the returns on your money are. Wealth grows much faster than the tax. If you have over $50 million (which is the target of this tax), or even if you have $5 million, you're not putting this in a savings account. Even just sticking it in an index fund and forgetting about it generates 8%, and has done so for decades.

MikeUt 5y ago
But as I pointed out in my other comment, those returns are already taxed. If you think those returns are excessive, the solution is to raise the tax on them, not introduce an entirely different type of tax, with plenty of collateral damage.
- vekker 5y ago
  Exactly, that's also what I try to point out to people: there are already tax mechanisms in place. Just raise tax rates if that's the goal. It seems to me with a wealth tax they just want to force everyone to work & spend forever, except for the ultra rich who can afford it and who have the means to hide most of their capital offshore. It would be a devastating blow to the FIRE movement, where normal people have the goal the accumulate enough resources & invest them wisely so they and their family can "retire" early.
  - SamBam 5y ago
    How many members of the FIRE movement have saved away $50 million? Remind me, is that "lean FIRE" or "fat FIRE?"

TheCoelacanth 5y ago

> That's re-building all of the wealth your family spent generations accumulating, every 50 years. Only if you assume a 0% rate-of-return on your family's wealth. With a realistic assumption about rate-of-return, your wealth will never deplete because of a 2% wealth tax. It will simply grow more slowly.

MikeUt 5y ago
You can't invest a family farm, or a painting. I will repeat myself a 3rd time - if the goal is to slow the growth of wealth, the right course of action is to raise the tax rate on the returns to that wealth. If you tax wealth itself, you're needlessly relying on the investability of said wealth, as well as on market returns.
- TheCoelacanth 5y ago
  Family farms produce income and are rarely large enough to hit the threshold for these proposed taxes. As for case of non-income generating wealth, too bad. If you can't manage to generate the absolutely pathetically low returns (2%!) that would be needed, then you don't deserve to be rich forever.