11 ms·

So you want to tax the rich? OK, let's start with Harvard

61 points by jaytaylor 5y ago

austincheney 5y ago
If people really wanted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes. Eliminate income taxes including capital gains taxes. Capital gains taxes are at a laughable rate anyways. Income taxes primarily tax the upper middle class not the rich or poor who either make no employment income or an insufficient amount. Everybody buys things though. To be fair to the poor eliminate food and water from sales taxes, which are not candy and soda. To be fair to everybody else eliminate deductions. Wealthy people who throw away money NFTs for $50 million should be charged a sales tax just as poor people who thrown away $100 per month on television packages. The argument against sales taxes is that they are a barrier to transaction frequency which is the heart of economic health, but they would cover everybody far more fairly. The only escape is to not purchase things. For most people wealth is tied to property, but just about everybody pays property taxes even if they don’t own property. For renters the expense of property taxes is indirectly passed to them as a basis of the rent. Higher property taxes burden more expensive property owners (and renters) disproportionately so it does tax the wealthy more, but not that much more since those expenses are redistributed in various ways through costs of living.
- ainiriand 5y ago
  Are you sure that you are thinking on a system that is fair to everyone and not just what is best for you? The core idea of taxes is that, to try and devise a system fair to everyone. The current system is not.
  - kgwgk 5y ago
    Depends a lot on the definition of fair.
- ajuc 5y ago
  > If people really wanted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes Why not the other way around? If you can't sell but can hold - people will hold and rent to others. We all played monopoly and know what the endgame is, right? If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD.
  - austincheney 5y ago
    Home ownership is living. Property rental is a business with risks not present in just ownership and is not always profitable. Property taxes effect home owners and landlords just the same, except landlords have to pass those expenses into rental prices if they wish to be in the green. > If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD. You must be in California where the taxes are weird. Everybody already pays much more than 5% where I live.
    - ajuc 5y ago
      I'm in Poland :) I meant cumulatively. If you own 200 things worth 10 000 usd each you should still pay 5% for 100 of them. > Home ownership is living. If you really need to live in a million dollar house you should be able to pay for it. It's not living it's luxury.
      - austincheney 5y ago
        I completely agree. Property taxes determine who can live where in my area more than any other factor including property price. There are pros and cons to that. For example if you want to turn a poor area into an incredibly wealthy area, cough cough Southlake, you raise the property taxes every year until poor people can no longer afford to live there and are forced to sell.
    - yellowapple 5y ago
      > except landlords have to pass those expenses into rental prices if they wish to be in the green. Except they can't, because (barring artificial price ceilings like rent control) they're almost certainly already charging the optimal rent for maximum profit; if they could actually charge higher without losing money as a result, they already would have, property tax or no. The actual reason property tax increases rental prices is because it penalizes development, meaning developers are less likely to build denser housing, meaning less housing supply, meaning higher housing prices. That is what is happening when landlords hike up prices in response to property tax increases; they are responding to the shifting intersection of supply and demand. Replacing property tax (and every other tax, for that matter, but that's a good starting point) with a land value tax would alleviate this problem, since it inverts the penalties - namely, by penalizing those who don't develop, meaning developers are more likely to build denser housing, meaning more housing supply, meaning lower housing prices. In this case, landlords are locked in; they still have to respond to the shifting intersection of supply and demand in order to maximize profit, and in this case that intersection results in a lower optimal price point. Literally zero opportunity to price LVT into apartment rentals this way; any attempt to do so results in the landlord losing profit.
- danpalmer 5y ago
  Sales taxes aren't a particularly balanced way of taxation. Someone living paycheck to paycheck essentially spends all of their income, which means that they pay the full amount of sales tax possible for someone with that income. Compared to someone saving or investing who doesn't pay as much tax as they could. A little simplified because sales taxes typically don't apply to things like rent, but the point still stands. The best way to tax the "rich" is normally a wealth tax – taxing the retained wealth rather than income or outgoings (sales tax). This could be a direct wealth tax, a property tax, inheritance tax, all sorts of options but they all have similar effects, outsized on the rich, small on the poor.
  - cameronh90 5y ago
    Sales taxes aren't the most balanced, but they are very easy to enforce and don't distort the economy very much. Standard wealth taxes are easy to avoid and have weird effects - but land value tax would probably be great. Unfortunately, people tend to vote against it.
    - sam_lowry_ 5y ago
      VAT is much easier to enforce than sales taxes, and as much as I dislike VAT, one can use it to enforce sustainable living and environmental policies. Think of 66% VAT applied to all products. Suddenly, repairing and extending lifetime of existing stuff becomes economically viable.
      - kgwgk 5y ago
        You would pay 66% VAT on repairs as well.
        sam_lowry_ 5y ago
        Only on the added value, e.g. a new smartphone glass. Work will be relatively cheaper. One of the most reasonable proposals for UBI is to finance it through VAT. Some 15 years ago there was a party in Belgium that lobbied for UBI and they calculated that VAT should increase from 21% to 33% to finance UBI.
- ivalm 5y ago
  This is very backwards. As percentage of income poor people pay more than rich. If you want to tax über wealthy just tax wealth directly (let’s say 3% on all US citizens and residents on all things values above $10mil).
  - JumpCrisscross 5y ago
    Wealth taxes basically guarantee that within a decade most wealth will be held in hard-to-value assets. It then becomes an arms race between lawyers and accountants. Given history, adding complexity to the tax system will benefit the rich at the expense of e.g. those of us with cash and stock and real estate. It would be a levy on the middle class.
    - bildung 5y ago
      Wealth taxes basically guarantee that within a decade most wealth will be held in hard-to-value assets. Why isn't this a problem in countries that already tax wealth, like France or Norway?
      - JumpCrisscross 5y ago
        > Why isn't this a problem in countries that already tax wealth, like France or Norway? The literature I’ve seen shows it is [1]. Anecdotally, France’s wealthy have more illiquid holdings and bespoke financial exposures than their American counterparts.(Counterfactual: There are many jurisdictions with wealth taxes [2].) [1] https://faktasiden.com/dokumenter/SSRN-id1268381.pdf https://faktasiden.com/dokumenter/SSRN-id1268381.pdf [2] http://qed.econ.queensu.ca/pub/cpp/Sept1991/Bird.pdf http://qed.econ.queensu.ca/pub/cpp/Sept1991/Bird.pdf
        bildung 5y ago
        That first paper doesn't talk about about changes in asset allocation due to the ISF. It's main argument is losses due to capital flight.
    - 5y ago
- dragonwriter 5y ago
  > If people really want anted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes. No, if people really wanted to tax the rich, it wouldn’t be by consumption taxes, as the rich have a lower marginal propensity to consume. That makes as much sense as taxing the rich via progressive income taxes, but making capital gains taxed at a lower top marginal rate with a less-progressive structure and labor income subject to special additional taxes. Both are tax-the-rich theater. If you want to tax the rich, use a progressive income tax and also: (1) treat capital income as normal income, not some specially favored category. (2) treat gifts and inheritances received as normal income, not some special category with exemptions that no non-rich person will ever exhaust. (3) treat labor income as normal income, not some special disfavored category with additional taxes on both the recipient and the provider of the income.
  - austincheney 5y ago
    > If you want to tax the rich, use a progressive income tax and also: That sounds good in theory but it never works in practice, historically speaking. In practice there are exceptions, deductions, and compromises. It always disadvantages the non wealthy who are not in a position to argue for their special cases.
    - dragonwriter 5y ago
      > That sounds good in theory but it never works in practice, historically speaking. That’s because people in practice don’t do the “and also” part, but instead do something like the tax-the-rich theater of “‘taxing the rich’ via progressive income taxes, but making capital gains taxed at a lower top marginal rate with a less-progressive structure and labor income subject to special additional taxes.” Because, in practice, the wealthy write the laws, and use control of the mechanisms of mass communication to focus attention on the parts that sound good favorable to the common man (progressive structure) and then distract from the impact of the bits that let the rich off and soak the working and middle class (preferential treatment of capital, gifts, and inheritances and anti-preferential treatment of labor income.) Hence my focus and the “and also” bits that need to be part of a progressive income tax system for it to work properly.
- Marazan 5y ago
  Sales tax are a terrible, regressive, way of raising money.
  - austincheney 5y ago
    Kind of like democracy is the worst form of government except for all the others. The issue here is fairness and ensuring the wealthy pay their share.
    - yellowapple 5y ago
      Except in this case quite literally every tax other than maybe sin taxes are leaps and bounds better than a sales tax. Even terrible taxes like income and payroll taxes are vastly preferable to sales tax when it comes to not disproportionately hurting low-income households. If you want to ensure the wealthy pay their fair share, a sales tax is about as counterproductive as it gets. Tax things with inelastic supply that rich people and large corporations are more likely to hoard. Land in particular is about ideal for this.
      - austincheney 5y ago
        Judging from all the comments here people don’t know what they want. They claim to want fair but then they make a bunch of unfair exceptions for poor people. They claim to want to tax the wealthy but not unless it’s full of exceptions that ultimately benefit the wealthy. > are leaps and bounds better than a sales tax. Define better. What should be the goal of taxation in only a numerical and objective way? From most of these comments the answer is something about land and wealth but void of any mention of taxable assets or specifically how to unfairly punish only certain persons.
        yellowapple 5y ago
        > What should be the goal of taxation in only a numerical and objective way? To force the internalization of otherwise-externalized opportunity costs. > From most of these comments the answer is something about land and wealth but void of any mention of taxable assets or specifically how to unfairly punish only certain persons. From my comments in particular, the taxable assets would be things with inelastic supply, land being the most notable and prevalent and universally-understood example. Land ownership inherently externalizes opportunity costs onto every other individual member of society, so a tax on land ownership proportional to the rental value of that land (i.e. the value which can be derived from that land, and which others who would use that land are missing out on by being excluded from it - a.k.a. the opportunity cost thereof) would internalize those externalized costs, to everyone's benefit. As for the "unfairly punish" part, none of what's proposed here is unfair at all. If you're going to claim an area of land for your own exclusive use, then it's only fair that you pay the rest of society your due rent. That is, to distill the point here a bit: the idea is to penalize behaviors, not persons. For example, the behavior of hoarding land as an investment and speculating upon it is arguably one of the main drivers of skyrocketing housing costs, said costs being especially high for lower and middle class households relative to their income. Taxing the value of land penalizes hoarding land as an investment (indeed, it instead becomes a liability), thus resolving that particular housing cost driver and improving things considerably for the lower and middle classes.
deepstack 5y ago
These endowment funds seems like an excellent idea to evade taxes. And a couple of years ago Harvard endowment fund has totally stopped their financial disclosure.
- chalst 5y ago
  Their charitable status helps them accumulate a big stash of assets, but an effective tax evasion scheme will have a way to get at your funds when you need them, and that is hard to do without obviously breaking the law.
- extra88 5y ago
  What kind of disclosure are you talking about? Harvard University publishes an annual financial report [0] every year which includes information about the performance and holdings of its endowment. Compared to 2005-06, the 2019-20 report appears no less detailed. Most people don't understand university endowments, Harvard's Endowment FAQs [1] are a short, helpful read that is mostly not specific to Harvard; "Many endowments, including Harvard’s, are structured to exist in perpetuity, meaning that the institution must continue to rely on the endowment’s earnings forever. Because of this, our endowment is not only for today’s generation, but is for all future generations of Harvard students and scholars." [0] https://finance.harvard.edu/endowment https://finance.harvard.edu/endowment [1] https://www.harvard.edu/about-harvard/endowment/ https://www.harvard.edu/about-harvard/endowment/
jacknews 5y ago
"... crimp spending on student aid or faculty research, but wealthy individuals can make the same argument: Higher taxes would reduce the amount of money they can invest in tech start-ups or other economically productive ventures." Clearly this is not the same argument at all. Student aid, and academic research are not the same as funding a startup. The difference is that colleges, or large grant-making foundations provide, and even exist, for the public good, rather than private profit. They should perhaps be forced to use more of the wealth for grants, to support poor students, etc, but that's not the same argument as that they should be charged the same taxes as ultra-wealthy idividuals.
- bradleyjg 5y ago
  We already have a method for determining what to spend money on for the public good. Why have a parallel method that gives only rough guidelines to private, unelected parties? If people want to donate money to charity, they ought to donate their own money not foregone taxes.
  - jacknews 5y ago
    You make a better argument than the article, but the implications are that you'd shift charitable activity from the private sector to government. That's not necessarily bad, but having a diversity of aid organizations is better, imho.
    - bradleyjg 5y ago
      What you’d lose in diversity, you’d gain in focus. They are flip sides of the same coin. Some donor thinks a museum of modern architecture is charitable, which is fine but I don’t want tax money diverted to that.
- anonymoushn 5y ago
  If an ultra-wealthy individual decides to become an endowment for a college and spend a small portion of their earnings each year administering the college, are we no longer supposed to tax them?
tester34 5y ago
just random thought is taxing very rich without hurting others possible?
- chalst 5y ago
  I think so. https://www.brookings.edu/bpea-articles/progressive-wealth-taxation/ https://www.brookings.edu/bpea-articles/progressive-wealth-t...
- dennis_jeeves 5y ago
  No, because you cannot draw the line at who is rich. Any tax based on wealth/income is fundamentally legalized (hence perfectly ethically acceptable to most morons) theft.
  - atat7024 5y ago
    So Americans in the 50s were at their most moronic? Apart from the obvious social considerations...this doesn't seem correct.
    - dennis_jeeves 5y ago
      >So Americans in the 50s were at their most moronic? Yep. Quote: if at age 20 you are not a socialist you do not have a heart. If at age 30 you are not a capitalist, you do not have a brain.
      - atat7024 5y ago
        Not Americans in their 50s. The 1950s.
        dennis_jeeves 5y ago
        No I did not misunderstand you. Though my quote did indicate age, that was a coincidence. Socialist policies are largely favored by the morons, they really do not see the slippery slope.
gnicholas 5y ago
As the saying goes, "Harvard/Yale are hedge funds with universities attached". https://thehustle.co/yale-harvard-crypto-investment-paradigm/ https://thehustle.co/yale-harvard-crypto-investment-paradigm...
- chalst 5y ago
  Economically, they are not normal universities: equally though, hedge funds are usually not charities. It's a nice quip - I've quoted it myself - but sometimes quips can mean you don't dig a little deeper.
- hemloc_io 5y ago
  In a similar vein some other colleges are just REITs with Universities attached. https://www.americancampus.com/for-universities/case-studies/drexel-university https://www.americancampus.com/for-universities/case-studies... https://en.wikipedia.org/wiki/John_Anderson_Fry https://en.wikipedia.org/wiki/John_Anderson_Fry
kwdc 5y ago
Catholic and other churches have a lot of money. Why not tax them?
- sneak 5y ago
  It's unconstitutional, right there in first nine words of 1A, even before the free speech part. It's not that churches are excluded from taxation, it is that they are excluded from all effects of lawmaking because of religion. The laws made can only apply to non-church entities. You can apply building and safety and occupancy codes to the structure, you can apply income tax to the attendees, et c, but it says right on the tin: "Congress shall make no law respecting an establishment of religion".
  - jacobolus 5y ago
    There is nothing in the constitution that says that religious organizations (or other kinds of organizations for that matter) should be tax exempt. These rules come from the US Code § 501 (c), https://www.law.cornell.edu/uscode/text/26/501 https://www.law.cornell.edu/uscode/text/26/501 > (3) [...] religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals [...]
    - sneak 5y ago
      You're right. The congress doesn't have the authority to tax (or legislate) them in the first place; not being subject to tax laws at all, they cannot be then exempted from tax liabilities under them.
  - Nursie 5y ago
    "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." I am not a constitutional scholar, nor am I even American, but that doesn't say to me that religions can't be taxed, so long as it's applied equally across all religious organisations. If they are taxed like businesses, they are still allowed to be practised, surely? And there is no 'establishment' of an official church or religion by taxing all equally.
yosamino 5y ago
What a warped worldview. I´m on board with criticizing universities and foundations that have so much money around and the elitism that promotes. But this reads like someone desparately trying to point fingers. Take this: > That means America’s charitable foundations and billionaire universities hold at least $1.5 trillion in assets. That’s far more wealth than that of Jeff Bezos, Bill Gates, Mark Zuckerberg, Elon Musk and the founders of Google and Oracle combined. That is just cherry picking. Filtering the Forbes 500 by USA and then adding peoples´ net worth, I need to go down to like #17 (USA based) and sum up as I go along to reach >1.5 Trillion. #17 is still an individual who owns 47 Billion USD. Not even taking into account that these are (with one exception) individuals, whereas "The Bill and Melinda Gates foundation" as the richtest of the bunch is valued around 47 Billion USD and Harvard sits at "only" 37. Based in this argument alone, it makes more sense to tax "Individuals who own more than a Billion USD" instead of "Charitable organizations and Universities who own more than one Billion USD" if one were to be forced to chose between the two.
- silicon2401 5y ago
  > Based in this argument alone, it makes more sense to tax "Individuals who own more than a Billion USD" instead of "Charitable organizations and Universities who own more than one Billion USD" if one were to be forced to chose between the two. But the washington post is owned by bezos, so I suspect you won't see articles making your point anytime soon
bryanlarsen 5y ago
Is Harvard subject to the same 5% payout rule that private charitable foundations are? I really like that rule. If you're not giving out at least 5% of the capital every year, it strongly implies that the purpose of your foundation is something other than giving out charity and you should be declassified as a non-profit.
stevej6x7 5y ago
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61 points by jaytaylor 5y ago

If people really wanted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes. Eliminate income taxes including capital gains taxes. Capital gains taxes are at a laughable rate anyways. Income taxes primarily tax the upper middle class not the rich or poor who either make no employment income or an insufficient amount. Everybody buys things though. To be fair to the poor eliminate food and water from sales taxes, which are not candy and soda. To be fair to everybody else eliminate deductions. Wealthy people who throw away money NFTs for $50 million should be charged a sales tax just as poor people who thrown away $100 per month on television packages. The argument against sales taxes is that they are a barrier to transaction frequency which is the heart of economic health, but they would cover everybody far more fairly. The only escape is to not purchase things. For most people wealth is tied to property, but just about everybody pays property taxes even if they don’t own property. For renters the expense of property taxes is indirectly passed to them as a basis of the rent. Higher property taxes burden more expensive property owners (and renters) disproportionately so it does tax the wealthy more, but not that much more since those expenses are redistributed in various ways through costs of living.

ainiriand 5y ago
Are you sure that you are thinking on a system that is fair to everyone and not just what is best for you? The core idea of taxes is that, to try and devise a system fair to everyone. The current system is not.
- kgwgk 5y ago
  Depends a lot on the definition of fair.
ajuc 5y ago
> If people really wanted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes Why not the other way around? If you can't sell but can hold - people will hold and rent to others. We all played monopoly and know what the endgame is, right? If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD.
- austincheney 5y ago
  Home ownership is living. Property rental is a business with risks not present in just ownership and is not always profitable. Property taxes effect home owners and landlords just the same, except landlords have to pass those expenses into rental prices if they wish to be in the green. > If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD. You must be in California where the taxes are weird. Everybody already pays much more than 5% where I live.
  - ajuc 5y ago
    I'm in Poland :) I meant cumulatively. If you own 200 things worth 10 000 usd each you should still pay 5% for 100 of them. > Home ownership is living. If you really need to live in a million dollar house you should be able to pay for it. It's not living it's luxury.
    - austincheney 5y ago
      I completely agree. Property taxes determine who can live where in my area more than any other factor including property price. There are pros and cons to that. For example if you want to turn a poor area into an incredibly wealthy area, cough cough Southlake, you raise the property taxes every year until poor people can no longer afford to live there and are forced to sell.
  - yellowapple 5y ago
    > except landlords have to pass those expenses into rental prices if they wish to be in the green. Except they can't, because (barring artificial price ceilings like rent control) they're almost certainly already charging the optimal rent for maximum profit; if they could actually charge higher without losing money as a result, they already would have, property tax or no. The actual reason property tax increases rental prices is because it penalizes development, meaning developers are less likely to build denser housing, meaning less housing supply, meaning higher housing prices. That is what is happening when landlords hike up prices in response to property tax increases; they are responding to the shifting intersection of supply and demand. Replacing property tax (and every other tax, for that matter, but that's a good starting point) with a land value tax would alleviate this problem, since it inverts the penalties - namely, by penalizing those who don't develop, meaning developers are more likely to build denser housing, meaning more housing supply, meaning lower housing prices. In this case, landlords are locked in; they still have to respond to the shifting intersection of supply and demand in order to maximize profit, and in this case that intersection results in a lower optimal price point. Literally zero opportunity to price LVT into apartment rentals this way; any attempt to do so results in the landlord losing profit.
danpalmer 5y ago
Sales taxes aren't a particularly balanced way of taxation. Someone living paycheck to paycheck essentially spends all of their income, which means that they pay the full amount of sales tax possible for someone with that income. Compared to someone saving or investing who doesn't pay as much tax as they could. A little simplified because sales taxes typically don't apply to things like rent, but the point still stands. The best way to tax the "rich" is normally a wealth tax – taxing the retained wealth rather than income or outgoings (sales tax). This could be a direct wealth tax, a property tax, inheritance tax, all sorts of options but they all have similar effects, outsized on the rich, small on the poor.
- cameronh90 5y ago
  Sales taxes aren't the most balanced, but they are very easy to enforce and don't distort the economy very much. Standard wealth taxes are easy to avoid and have weird effects - but land value tax would probably be great. Unfortunately, people tend to vote against it.
  - sam_lowry_ 5y ago
    VAT is much easier to enforce than sales taxes, and as much as I dislike VAT, one can use it to enforce sustainable living and environmental policies. Think of 66% VAT applied to all products. Suddenly, repairing and extending lifetime of existing stuff becomes economically viable.
    - kgwgk 5y ago
      You would pay 66% VAT on repairs as well.
      - sam_lowry_ 5y ago
        Only on the added value, e.g. a new smartphone glass. Work will be relatively cheaper. One of the most reasonable proposals for UBI is to finance it through VAT. Some 15 years ago there was a party in Belgium that lobbied for UBI and they calculated that VAT should increase from 21% to 33% to finance UBI.
ivalm 5y ago
This is very backwards. As percentage of income poor people pay more than rich. If you want to tax über wealthy just tax wealth directly (let’s say 3% on all US citizens and residents on all things values above $10mil).
- JumpCrisscross 5y ago
  Wealth taxes basically guarantee that within a decade most wealth will be held in hard-to-value assets. It then becomes an arms race between lawyers and accountants. Given history, adding complexity to the tax system will benefit the rich at the expense of e.g. those of us with cash and stock and real estate. It would be a levy on the middle class.
  - bildung 5y ago
    Wealth taxes basically guarantee that within a decade most wealth will be held in hard-to-value assets. Why isn't this a problem in countries that already tax wealth, like France or Norway?
    - JumpCrisscross 5y ago
      > Why isn't this a problem in countries that already tax wealth, like France or Norway? The literature I’ve seen shows it is [1]. Anecdotally, France’s wealthy have more illiquid holdings and bespoke financial exposures than their American counterparts.(Counterfactual: There are many jurisdictions with wealth taxes [2].) [1] https://faktasiden.com/dokumenter/SSRN-id1268381.pdf https://faktasiden.com/dokumenter/SSRN-id1268381.pdf [2] http://qed.econ.queensu.ca/pub/cpp/Sept1991/Bird.pdf http://qed.econ.queensu.ca/pub/cpp/Sept1991/Bird.pdf
      - bildung 5y ago
        That first paper doesn't talk about about changes in asset allocation due to the ISF. It's main argument is losses due to capital flight.
  - 5y ago
dragonwriter 5y ago
> If people really want anted to tax the rich the majority of taxes would come from sales taxes and minority from property taxes. No, if people really wanted to tax the rich, it wouldn’t be by consumption taxes, as the rich have a lower marginal propensity to consume. That makes as much sense as taxing the rich via progressive income taxes, but making capital gains taxed at a lower top marginal rate with a less-progressive structure and labor income subject to special additional taxes. Both are tax-the-rich theater. If you want to tax the rich, use a progressive income tax and also: (1) treat capital income as normal income, not some specially favored category. (2) treat gifts and inheritances received as normal income, not some special category with exemptions that no non-rich person will ever exhaust. (3) treat labor income as normal income, not some special disfavored category with additional taxes on both the recipient and the provider of the income.
- austincheney 5y ago
  > If you want to tax the rich, use a progressive income tax and also: That sounds good in theory but it never works in practice, historically speaking. In practice there are exceptions, deductions, and compromises. It always disadvantages the non wealthy who are not in a position to argue for their special cases.
  - dragonwriter 5y ago
    > That sounds good in theory but it never works in practice, historically speaking. That’s because people in practice don’t do the “and also” part, but instead do something like the tax-the-rich theater of “‘taxing the rich’ via progressive income taxes, but making capital gains taxed at a lower top marginal rate with a less-progressive structure and labor income subject to special additional taxes.” Because, in practice, the wealthy write the laws, and use control of the mechanisms of mass communication to focus attention on the parts that sound good favorable to the common man (progressive structure) and then distract from the impact of the bits that let the rich off and soak the working and middle class (preferential treatment of capital, gifts, and inheritances and anti-preferential treatment of labor income.) Hence my focus and the “and also” bits that need to be part of a progressive income tax system for it to work properly.
Marazan 5y ago
Sales tax are a terrible, regressive, way of raising money.
- austincheney 5y ago
  Kind of like democracy is the worst form of government except for all the others. The issue here is fairness and ensuring the wealthy pay their share.
  - yellowapple 5y ago
    Except in this case quite literally every tax other than maybe sin taxes are leaps and bounds better than a sales tax. Even terrible taxes like income and payroll taxes are vastly preferable to sales tax when it comes to not disproportionately hurting low-income households. If you want to ensure the wealthy pay their fair share, a sales tax is about as counterproductive as it gets. Tax things with inelastic supply that rich people and large corporations are more likely to hoard. Land in particular is about ideal for this.
    - austincheney 5y ago
      Judging from all the comments here people don’t know what they want. They claim to want fair but then they make a bunch of unfair exceptions for poor people. They claim to want to tax the wealthy but not unless it’s full of exceptions that ultimately benefit the wealthy. > are leaps and bounds better than a sales tax. Define better. What should be the goal of taxation in only a numerical and objective way? From most of these comments the answer is something about land and wealth but void of any mention of taxable assets or specifically how to unfairly punish only certain persons.
      - yellowapple 5y ago
        > What should be the goal of taxation in only a numerical and objective way? To force the internalization of otherwise-externalized opportunity costs. > From most of these comments the answer is something about land and wealth but void of any mention of taxable assets or specifically how to unfairly punish only certain persons. From my comments in particular, the taxable assets would be things with inelastic supply, land being the most notable and prevalent and universally-understood example. Land ownership inherently externalizes opportunity costs onto every other individual member of society, so a tax on land ownership proportional to the rental value of that land (i.e. the value which can be derived from that land, and which others who would use that land are missing out on by being excluded from it - a.k.a. the opportunity cost thereof) would internalize those externalized costs, to everyone's benefit. As for the "unfairly punish" part, none of what's proposed here is unfair at all. If you're going to claim an area of land for your own exclusive use, then it's only fair that you pay the rest of society your due rent. That is, to distill the point here a bit: the idea is to penalize behaviors, not persons. For example, the behavior of hoarding land as an investment and speculating upon it is arguably one of the main drivers of skyrocketing housing costs, said costs being especially high for lower and middle class households relative to their income. Taxing the value of land penalizes hoarding land as an investment (indeed, it instead becomes a liability), thus resolving that particular housing cost driver and improving things considerably for the lower and middle classes.

deepstack 5y ago

These endowment funds seems like an excellent idea to evade taxes. And a couple of years ago Harvard endowment fund has totally stopped their financial disclosure.

chalst 5y ago
Their charitable status helps them accumulate a big stash of assets, but an effective tax evasion scheme will have a way to get at your funds when you need them, and that is hard to do without obviously breaking the law.
extra88 5y ago
What kind of disclosure are you talking about? Harvard University publishes an annual financial report [0] every year which includes information about the performance and holdings of its endowment. Compared to 2005-06, the 2019-20 report appears no less detailed. Most people don't understand university endowments, Harvard's Endowment FAQs [1] are a short, helpful read that is mostly not specific to Harvard; "Many endowments, including Harvard’s, are structured to exist in perpetuity, meaning that the institution must continue to rely on the endowment’s earnings forever. Because of this, our endowment is not only for today’s generation, but is for all future generations of Harvard students and scholars." [0] https://finance.harvard.edu/endowment https://finance.harvard.edu/endowment [1] https://www.harvard.edu/about-harvard/endowment/ https://www.harvard.edu/about-harvard/endowment/

jacknews 5y ago

"... crimp spending on student aid or faculty research, but wealthy individuals can make the same argument: Higher taxes would reduce the amount of money they can invest in tech start-ups or other economically productive ventures." Clearly this is not the same argument at all. Student aid, and academic research are not the same as funding a startup. The difference is that colleges, or large grant-making foundations provide, and even exist, for the public good, rather than private profit. They should perhaps be forced to use more of the wealth for grants, to support poor students, etc, but that's not the same argument as that they should be charged the same taxes as ultra-wealthy idividuals.

bradleyjg 5y ago
We already have a method for determining what to spend money on for the public good. Why have a parallel method that gives only rough guidelines to private, unelected parties? If people want to donate money to charity, they ought to donate their own money not foregone taxes.
- jacknews 5y ago
  You make a better argument than the article, but the implications are that you'd shift charitable activity from the private sector to government. That's not necessarily bad, but having a diversity of aid organizations is better, imho.
  - bradleyjg 5y ago
    What you’d lose in diversity, you’d gain in focus. They are flip sides of the same coin. Some donor thinks a museum of modern architecture is charitable, which is fine but I don’t want tax money diverted to that.
anonymoushn 5y ago
If an ultra-wealthy individual decides to become an endowment for a college and spend a small portion of their earnings each year administering the college, are we no longer supposed to tax them?

tester34 5y ago

just random thought is taxing very rich without hurting others possible?

chalst 5y ago
I think so. https://www.brookings.edu/bpea-articles/progressive-wealth-taxation/ https://www.brookings.edu/bpea-articles/progressive-wealth-t...
dennis_jeeves 5y ago
No, because you cannot draw the line at who is rich. Any tax based on wealth/income is fundamentally legalized (hence perfectly ethically acceptable to most morons) theft.
- atat7024 5y ago
  So Americans in the 50s were at their most moronic? Apart from the obvious social considerations...this doesn't seem correct.
  - dennis_jeeves 5y ago
    >So Americans in the 50s were at their most moronic? Yep. Quote: if at age 20 you are not a socialist you do not have a heart. If at age 30 you are not a capitalist, you do not have a brain.
    - atat7024 5y ago
      Not Americans in their 50s. The 1950s.
      - dennis_jeeves 5y ago
        No I did not misunderstand you. Though my quote did indicate age, that was a coincidence. Socialist policies are largely favored by the morons, they really do not see the slippery slope.

gnicholas 5y ago

As the saying goes, "Harvard/Yale are hedge funds with universities attached". https://thehustle.co/yale-harvard-crypto-investment-paradigm/ https://thehustle.co/yale-harvard-crypto-investment-paradigm...

chalst 5y ago
Economically, they are not normal universities: equally though, hedge funds are usually not charities. It's a nice quip - I've quoted it myself - but sometimes quips can mean you don't dig a little deeper.
hemloc_io 5y ago
In a similar vein some other colleges are just REITs with Universities attached. https://www.americancampus.com/for-universities/case-studies/drexel-university https://www.americancampus.com/for-universities/case-studies... https://en.wikipedia.org/wiki/John_Anderson_Fry https://en.wikipedia.org/wiki/John_Anderson_Fry

kwdc 5y ago

Catholic and other churches have a lot of money. Why not tax them?

sneak 5y ago
It's unconstitutional, right there in first nine words of 1A, even before the free speech part. It's not that churches are excluded from taxation, it is that they are excluded from all effects of lawmaking because of religion. The laws made can only apply to non-church entities. You can apply building and safety and occupancy codes to the structure, you can apply income tax to the attendees, et c, but it says right on the tin: "Congress shall make no law respecting an establishment of religion".
- jacobolus 5y ago
  There is nothing in the constitution that says that religious organizations (or other kinds of organizations for that matter) should be tax exempt. These rules come from the US Code § 501 (c), https://www.law.cornell.edu/uscode/text/26/501 https://www.law.cornell.edu/uscode/text/26/501 > (3) [...] religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals [...]
  - sneak 5y ago
    You're right. The congress doesn't have the authority to tax (or legislate) them in the first place; not being subject to tax laws at all, they cannot be then exempted from tax liabilities under them.
- Nursie 5y ago
  "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." I am not a constitutional scholar, nor am I even American, but that doesn't say to me that religions can't be taxed, so long as it's applied equally across all religious organisations. If they are taxed like businesses, they are still allowed to be practised, surely? And there is no 'establishment' of an official church or religion by taxing all equally.

yosamino 5y ago

What a warped worldview. I´m on board with criticizing universities and foundations that have so much money around and the elitism that promotes. But this reads like someone desparately trying to point fingers. Take this: > That means America’s charitable foundations and billionaire universities hold at least $1.5 trillion in assets. That’s far more wealth than that of Jeff Bezos, Bill Gates, Mark Zuckerberg, Elon Musk and the founders of Google and Oracle combined. That is just cherry picking. Filtering the Forbes 500 by USA and then adding peoples´ net worth, I need to go down to like #17 (USA based) and sum up as I go along to reach >1.5 Trillion. #17 is still an individual who owns 47 Billion USD. Not even taking into account that these are (with one exception) individuals, whereas "The Bill and Melinda Gates foundation" as the richtest of the bunch is valued around 47 Billion USD and Harvard sits at "only" 37. Based in this argument alone, it makes more sense to tax "Individuals who own more than a Billion USD" instead of "Charitable organizations and Universities who own more than one Billion USD" if one were to be forced to chose between the two.

silicon2401 5y ago
> Based in this argument alone, it makes more sense to tax "Individuals who own more than a Billion USD" instead of "Charitable organizations and Universities who own more than one Billion USD" if one were to be forced to chose between the two. But the washington post is owned by bezos, so I suspect you won't see articles making your point anytime soon

bryanlarsen 5y ago

Is Harvard subject to the same 5% payout rule that private charitable foundations are? I really like that rule. If you're not giving out at least 5% of the capital every year, it strongly implies that the purpose of your foundation is something other than giving out charity and you should be declassified as a non-profit.

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