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Because they don't work. Many EU countries have attempted them and they have all failed. There are a host of issues with wealth taxes, one of which is simply pl
by hitpointdrew 5y ago
Because they don't work. Many EU countries have attempted them and they have all failed. There are a host of issues with wealth taxes, one of which is simply placing value on illiquid assets is difficult. How much is that rare art price worth? Well no one knows until you put it on the market. Then there are issues with immaterial things like rights, that would be very tricky to value. What if you had the rights to all of Bill Cosby's recorded stand-up acts? That could have been valued highly before the rape convictions, now it is essentially worthless. A wealth tax would just create a battle of litigation between the wealthy and IRS, and the wealthy would win. The real solution is to just have a VAT like every other developed nation in the world, is the only way to get slice of the pie from the wealthy.
- ekelsen 5y agoIt's not that hard to find a price for a rare art piece, or almost any other asset. Make the owner declare its value, tax it at the value. But anyone can buy it at that price. If they want to keep it, they'll need to value it correctly, and thus it will get taxed correctly.
- tornato7 5y agoThis is called a Harberger tax and there has been extensive research on it: https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=12668&context=journal_articles https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?arti...
- ccn0p 5y agothis would effectively auction off everything you own. What if an original piece of art is priceless to you? Where does it end?
- NullPrefix 5y agoIf it is actually priceless, then you should not be able to hog it for yourself. /s
- sokoloff 5y agoCan you imagine the day that you declare a value on your house and the following week someone much richer than you comes along and tells you to "beat it; I just bought this place!"
- lovecg 5y agoWould do wonders for the Bay Area housing market! On a serious note, this proposal was originally coupled with a pretty radical (from our point of view) approach to land ownership. Land is closer to zero-sum than many other things (ignoring artificial islands etc.), so this forces a more efficient pricing/land use at the expense of doing away with private property rights for land.
- sokoloff 5y agoWorried that a competitor is catching up or threatening your market? Use your cash reserves to buy their factory out from under them. Don’t bother competing with Tesla, just make sure they can’t keep going once they get a little traction.
- ekelsen 5y agoImagine a reasonable policy rather than simplistic worst possible policy strawman. There are already many many laws that prevent abusive transactions in the current system, there's no reason that there wouldn't need to be similar laws to prevent abuse here either.
- ekelsen 5y agoOne can imagine reasonable policies around things like housing, my original two line reply was not meant to detail all the ways this would for all types of assets. I don't think anyone would have much of a problem with the simplistic scheme applied to rare art though.
- sokoloff 5y agoI do have a problem with that. I would prefer the Mona Lisa to remain in the hands of the Louvre than be regularly auctioned off. I would prefer American Gothic to remain in the hands of the Art Institute of Chicago, etc.
- cableshaft 5y agoThis a worse idea than the Jump to Conclusions mat. I have to choose a price for all of my assets and then anyone could just be like 'yeah, I'll buy at that price' and take it from me? What if I bought the assets for the hope of it maybe being worth something in 5-10 years? Do I prematurely announce 'yeah, it's worth the price in 5-10 years that I hope it will be', and pay an enormous tax on something that's not a guarantee it will ever go to that price, just to keep other people from buying it from me if I announced what the market value is now? (And also I'm not allowed to keep any assets at market value unless I announce it's worth more to me?) Ugh. Never get in a position where you could feasibly propose this in government, please.
- ekelsen 5y agoYour reply could have been written to be a lot less insulting and assume I'm aware of policy implications of this proposal but did not choose delve into 150 years of research in a two line reply on HN. I wasn't proposing that this become policy for all assets. Would it allow you to accurately assess the price of rare high valued art for the purposes of a wealth tax -- yes. It would also allow you to value other assets as well, but there are drawbacks. I don't think your example of speculation is particularly good example of a drawback though. If you need to set the price at X so that someone doesn't buy it from you now, then that means its value is indeed just below X (assuming you've set X correctly). If you're the only person in the world you thinks that the value of your asset will be 10X in 10 years, then you can safely set the value at X now and nobody will buy it from you. If you aren't the only person in the world who thinks this and someone is willing to buy it from you now for 2X, then I guess the value of the asset right now is 2X.
- yupper32 5y agoIt's a completely ridiculous policy that would require enumerating every item in history and deciding if people are able to buy it from you. My fridge? My dog? My shoes? My car? My bike? My boat? My model railroad set? My grandmothers ashes? My underwear? Oops I accidentally undervalued my gaming computer on my taxes and now people are knocking on my door. You'd end up with a document 3 million pages long and vengeful neighbors and exes buying each others items to fuck with each other. You're calling it a strawman argument, but these are actual things that would have to be addressed. No amount of "delving into 150 years of research" gets around all the massive, massive holes in your ridiculous idea.
- chmod600 5y agoInteresting idea, but a fundamental aspect of private property is that you don't have to sell it. Maybe someone knocks on your door and says "I just bought your house. Get out." That would be pretty unpleasant. Or, more on topic for this site: maybe they do that with your startup.
- wing-_-nuts 5y agoYour overall point is right, a wealth tax would be massively complex. In all honesty it's probably only worth implementing on billionaires (and using some of the funds raised for beefing up the IRS legal team and auditors). One thing I want to point out, the reason why 'wealth taxes have always failed' is because it's against the interests of the wealthy, and the wealthy are powerful. Look how scared republicans are of grover norquist and the billionaires that back him. It's hard not to argue the same thing is happening in the EU as well.
- dexterdog 5y agoHow do you even implement in on "only billionaires?" Wouldn't everybody need to doc their wealth to prove that they are not a billionaire?
- wing-_-nuts 5y agoBillionaires are largely majority shareholders in corporations. I'd say that's a fine place to look. Maybe the IRS can look at the assets of anyone who's suspected to be worth 750M or more. Again, as I said, you could fund better enforcement of this by funding an IRS task force who's job it is to find and tax them. I can't believe something so simple as 'billionaires should pay more than 23% (or whatever it is) taxes are controversial, but here we are. I especially love how the Koch brothers effectively funded an astroturf campaign that hijacked the republican party, to get blue collar folks to argue against taxes on the 1%. That is some rich irony.
- dexterdog 5y agoNobody is saying they shouldn't pay taxes. People are saying they shouldn't be taxed on their wealth partially because anybody with an inkling of historic knowledge knows that a wealth tax will be coming to the masses shortly thereafter. Taxes are already far too complicated.
- plmu 5y agoMost European countries, including Switzerland, still have them. They do work with some limits. And they are absolutely necessary to prevent that, once you have made money, you can profit for the rest of your life including future generations. If there is no form of weath + inheritance tax, a feudal society is unavoidable. Even if difficult, we'd better try.
- imtringued 5y agoI don't see the problem. As long as there is 2% inflation that wealth needs to be put to work in a way that ends up employing someone, therefore the employee benefits from the existence of the wealth that someone else carried hundreds of years into the future.
- ac29 5y ago> As long as there is 2% inflation that wealth needs to be put to work in a way that ends up employing someone What exactly do you mean by this? Holding wealth in bars of gold doesnt need to employee anyone (if you have enough of them, you might want security personnel, but you could also just own a Gold ETF or something).
- chrismcb 5y agoWhy should we try? Other than wanting to be greedy and steal from the rich, what reason do we have to try?
- slg 5y agoMany of these things are already valued, including some by the government such as lot of real estate. We can work to use those valuations. We can make it so insurance companies need to report valuations to the government for example. A painting worth 7 figures is going to be listed in some insurance policy. Report that number to the government and there is no legal argument to be had. Either it is being overvalued for insurance fraud purposes or undervalued for tax fraud purposes. The conflicting incentives should yield a relatively accurate valuation. We also don’t need to make perfect the enemy of the good. We don’t need to account for absolutely every piece of wealth if we cover the big ones. We can also continue to revise these tax policies as new loopholes are discovered and exploited.
- tannhauser23 5y ago"there is no legal argument to be had" Oh bless your heart.
- slg 5y agoArguing that one valuation is too low/high is and admission that the valuation is wrong and you are therefore open to accusations of fraud. So maybe “no legal argument” is an oversimplification, but no reasonable legal argument can be made without an admission that the other party needs to update their valuation in their benefit.
- pinky1417 5y agoPerfect *is* the enemy of the good here. Major components of the economy are not valued regularly, e.g. private businesses. Sure, if a buyer paid $10MM last week for a private business, we might say it's worth $10MM today. But what about a business that was started from scratch by the founder? Or one that was last sold 30 years ago? Or one in a very niche industry? Put simply, valuation is not only a science, but an art... and it's an expensive art. The cost and difficulty of administration alone would be reason enough to steer clear of a wealth tax. Lastly, although I'm not a fan of higher taxes on anyone, even simply a more progressive income tax would make more sense than a wealth tax.
- pnutjam 5y agoQuestion? How do you feel about healthcare? Why is this the one place we should follow the rest of the world, wealth tax / VAT? One might suspect the wealthy are just dropping turds in the punchbowl.
- eecc 5y agoThe Dutch (notoriously not the most Socialist of the lot) tax office assumes that any wealth above a certain “pocket money” stash, your first house and lifelong savings (money you effectively lock out of your reach until you reach pension) are invested and therefore taxed at ~20% on the assumed ~2% ROI. Seems roughly fair
- HWR_14 5y agoHow do you separate wealth building from consumption? If you buy 10 art pieces that could be an investment or an aesthetic/decorating choice. If you buy a TV it's almost certainly going to be worth nothing in a a few years.