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The problem, as always, is implementation. Millionaires, especially those on the low end of that spectrum, tend to be fairly easy to tax. Their income sources a
by curun1r 5y ago
The problem, as always, is implementation. Millionaires, especially those on the low end of that spectrum, tend to be fairly easy to tax. Their income sources are mostly regular and standard forms of income tax work pretty well.
Billionaires are a very different animal. They have armies of lawyers and financial managers that help them navigate the movement of wealth through the global system to avoid taxation. They avoid recognizing income at all opportunities and strategically use debt to provide for themselves without exposing themselves to tax consequences that would come from getting the money they want to spend. They can traverse the globe looking for the most favorable taxation rates to maximize their wealth.
There’s been a lot of “tax billionaires” and “billionaires shouldn’t exist” rhetoric without much substance to how to actually achieve that goal. Billionaires aren’t just going to say “aww, shucks, guess we’ve got to pay up” when governments decide to up their taxes. They’re going to react in ways that are both hard to predict and harder to stop. Capital flight is a real threat and will require a massive, coordinated effort on the parts of all the nations that comprise the global financial system to curtail. The efforts towards a minimum corporate tax rate are a good start, but that’s only one step of many that are necessary before “tax billionaires” becomes a realistic target.
- AnimalMuppet 5y agoBillionaires are going to react by lobbying very heavily to get loopholes created in the legislation. And each country writes their own legislation, which means each country creates their own set of loopholes. The net result is going to be that the tax system gets more byzantine, the government says "look, we started taxing billionaires", and the billionaires still aren't paying. But filing taxes will get more complicated for millionaires and upper-middle-class people. I'm not normally a highly cynical person. But I am cynical about the government's ability to wisely write legislation in the face of a heavy lobbying blitz.
- bradlys 5y agoA lot of those people in congress would also be affected by the changes. They're not the kind to implement more taxes on themselves. After all - the difference in ideas between "conservatives" and "liberals" in office comes down to how much they want to wave a confederate vs pride flag. They have almost no fiscal differences and all want as low of taxes as possible on the highest NW individuals like themselves.
- throw0101a 5y ago> Billionaires are a very different animal. You don't go after the billionaires, but after the banks and such that the billionaires use. FACTA and the long arm of the IRS caused a lot of behaviour changes in the banking and finance industry: * https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...
- curun1r 5y agoThat's only for evasion, I'm talking about avoidance. Most billionaires can easily spend their entire lifetime avoiding taxes. Taking out a low-interest ELOC against unrealized gains is 100% legal and a low-risk transaction for a bank. No amount of "going after the banks" changes that.
- ben_w 5y ago> 100% legal and a low-risk transaction for a bank. No amount of "going after the banks" changes that. With the caveat that I don’t know if this is a good idea or not, a government can absolutely change the law if they want to give themselves the powers to prevent that from happening.