3 ms·

So lots of people saying the ultra rich are hard to tax because they take out loans against assets to fund the day-to-day. This then results in an argument abou

So lots of people saying the ultra rich are hard to tax because they take out loans against assets to fund the day-to-day. This then results in an argument about the morality/viability/etc of a wealth tax. But... why can't we just tax the loans?

notriddle 5y ago
Small business owners take out loans in order to build up their company. Making that harder seems like something HN would implicitly dislike.
hawk_ 5y ago
yes that's called interest which the fed is reluctant to raise to appease the same lot in the name of improving employment.
- jl2718 5y ago
  Your comment made me realize something. The government is funded by taxes and bond sales. Bond purchases absorb high interest rate demand across the entire market. If there weren't any taxes, there would be higher interest rates. So taxes are what subsidizes low interest rates. We're the ones paying the interest on their loans. Now it all makes sense. Mind is blown.
marcell 5y ago
If you tax loans that means every credit card purchase or mortgage would trigger a tax. If you receive a $400k loan for a mortgage, that would mean something like $100k in taxes for an upper middle earner.
- fastball 5y ago
  Thresholds + only collateralized loans?
  - marcell 5y ago
    Pawnshops are collateralized loans for the poor. If the goal is to tax the rich, just be more direct and tax the rich. A wealth tax would work, no need for elaborate schemes.
    - fastball 5y ago
      > Pawnshops are collateralized loans for the poor. Yes, that's why I said "thresholds". Not suggesting we tax small loans (or a small total value of loans taken out by an individual, regardless of the value of the individual loans). > wealth tax By many people's estimation, a wealth tax is an elaborate scheme, because is unrealized wealth really wealth? If Bezos has $100B in stock but a sale of all that stock would only fetch $60B, do we still tax on $100B? How can someone's wealth be realistically and equitably calculated if it is not realized? Putting fairness aside for a minute, you are probably severely underestimating the overhead / elaborateness of such calculations.

notriddle 5y ago

Small business owners take out loans in order to build up their company. Making that harder seems like something HN would implicitly dislike.

hawk_ 5y ago

yes that's called interest which the fed is reluctant to raise to appease the same lot in the name of improving employment.

jl2718 5y ago
Your comment made me realize something. The government is funded by taxes and bond sales. Bond purchases absorb high interest rate demand across the entire market. If there weren't any taxes, there would be higher interest rates. So taxes are what subsidizes low interest rates. We're the ones paying the interest on their loans. Now it all makes sense. Mind is blown.

marcell 5y ago

If you tax loans that means every credit card purchase or mortgage would trigger a tax. If you receive a $400k loan for a mortgage, that would mean something like $100k in taxes for an upper middle earner.

fastball 5y ago
Thresholds + only collateralized loans?
- marcell 5y ago
  Pawnshops are collateralized loans for the poor. If the goal is to tax the rich, just be more direct and tax the rich. A wealth tax would work, no need for elaborate schemes.
  - fastball 5y ago
    > Pawnshops are collateralized loans for the poor. Yes, that's why I said "thresholds". Not suggesting we tax small loans (or a small total value of loans taken out by an individual, regardless of the value of the individual loans). > wealth tax By many people's estimation, a wealth tax is an elaborate scheme, because is unrealized wealth really wealth? If Bezos has $100B in stock but a sale of all that stock would only fetch $60B, do we still tax on $100B? How can someone's wealth be realistically and equitably calculated if it is not realized? Putting fairness aside for a minute, you are probably severely underestimating the overhead / elaborateness of such calculations.