4 ms·

Sigh... Wealth taxes don't work. Almost every single European country that had a wealth tax repealed theirs. The fact that Senator Warren is continuing to try t

by anderson1993 5y ago

Sigh... Wealth taxes don't work. Almost every single European country that had a wealth tax repealed theirs. The fact that Senator Warren is continuing to try to push a wealth tax shows how poor her policies are.

vmception 5y ago
The US also repealed its wealth tax promptly after introduction in the 90s.
aantix 5y ago
Why don't wealth taxes work? Which countries repealed?
- lbriner 5y ago
  I guess they only work if everyone uses them, otherwise the danger is that a billionaire takes their business elsewhere.
- baggy_trough 5y ago
  For example, that well known bastion of fascist right-wing policies, France. https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth
- cscurmudgeon 5y ago
  https://www.npr.org/2019/03/01/699261950/why-a-wealth-tax-didnt-work-in-europe https://www.npr.org/2019/03/01/699261950/why-a-wealth-tax-di... > ROSALSKY: In 1990, there were 12 countries in Europe that had a wealth tax. Today there are only three. Perret says they didn't work for a lot of reasons. Among other things, it costs a lot to enforce. It pushed rich people out of the country, and the wealth taxes didn't raise a lot of revenue. But > ROSALSKY: But Warren says that her proposal, which has no exemptions, will play out differently in the United States. Greg Rosalsky, NPR News. Unfortunately, nothing in her proposal justifies that. Why can't companies and people just move out of the US to avoid this? Singapore or other countries will readily welcome them.
  - littlestymaar 5y ago
    > Perret says they didn't work for a lot of reasons. Among other things, it costs a lot to enforce. It pushed rich people out of the country, and the wealth taxes didn't raise a lot of revenue. In France at least, it has been a topic of political debate for decades before the recent abolition and what's clear at this point is that it costed much less than what it brought (both in terms of law enforcement, and in terms of rich people moving out of the country). > Unfortunately, nothing in her proposal justifies that. Why can't companies and people just move out of the US to avoid this? A wealth tax isn't a tax on a company, it's a tax on the owner of the company so moving the company won't help here. And the owner leaving the US won't help either, since they will still have to pay taxes as long as they remain a US citizen. Renouncing to US citizenship would still be an option of course, but I'd expect the opportunity cost would be much higher than the cost of the tax itself.
    - cscurmudgeon 5y ago
      > . Renouncing to US citizenship would still be an option of course, but I'd expect the opportunity cost would be much higher than the cost of the tax itself. Why? In 2021, a lot of countries have US levels or better infrastructure. The owner can reside outside the US and still make products for the US and the world. > Americans Gave Up Citizenship in Record Numbers in 2020, Up Triple From 2019, Reports Tax Specialists Americans Overseas https://www.prnewswire.com/news-releases/americans-gave-up-citizenship-in-record-numbers-in-2020-up-triple-from-2019-reports-tax-specialists-americans-overseas-301222817.html https://www.prnewswire.com/news-releases/americans-gave-up-c...
  - ulkram 5y ago
    not an expert, but I thought the US is unique in that you can't escape taxes unless you renounce citizenship. and even then, there's an exit tax
    - cscurmudgeon 5y ago
      Renounce, pay the tax once and live free?
- puchatek 5y ago
  Germany suspended it's wealth tax and some parties are now contemplating whether to reactivate it. Might be just pre-election noise but who knows
nerbert 5y ago
It's not because they repealed them that they don't work. It could also be a symptom of the current times in which wealthy people became extremely good at influencing politics to reinforce their position.
- motives 5y ago
  This is a point worth emphasizing, a tax being repealed does not necessarily imply a lack of efficacy, due to the aforementioned reasons of political influence/corruption etc. Switzerland has done very well with a global wealth tax, arguably being the highest standard of living in Europe.
javert 5y ago
America forces people to renounce citizenship to avoid high taxes (unlike every other country in the world where you can just leave the country), so the people who flee Warren's wealth tax will not ever be coming back.
soberpeach 5y ago
It depends how the wealth tax is implemented. European wealth taxes were primarily on capital like stocks, which are extremely easy to move, even easier than income. A wealth tax on land (an LVT) is literally impossible to avoid however since you can't move the land.
- umeshunni 5y ago
  > A wealth tax on land (an LVT) is literally impossible to avoid however since you can't move the land. Yeah, those are called property taxes and already exist.
  - soberpeach 5y ago
    Property taxes tax buildings as well, a Land Value Tax is purely a tax on the land and doesn't change whether you have a building on it or not.
jsilence 5y ago
Yeah, not taxing the rich also does not work. See the trillion Dollar tax break Pres. Trump and the GOP implemented. The savings were supposed to somehow trickle down to the "lower decks", but this has proven not to happen. Meanwhile the ultra rich are getting ultra richer and the rest is getting poorer. So lets globally coordinated tax the rich for a while in a way that they can not evade their net wealth to some other country and lets see how well that works.
- dantheman 5y ago
  The rich already pay almost all of the taxes anyway. The government just needs to do less to balance the budget.
  - evilos 5y ago
    Well that is expected when they own most of the capital/money. That's not really a factor or surprising. What is important is how much a person is paying as a function of how rich they are. Rich people get to pay way less and it's not fair. They can get around tax laws because their cash flows don't look like the average citizen's tax flows.
- dahfizz 5y ago
  > The savings were supposed to somehow trickle down to the "lower decks", but this has proven not to happen. Do you have more info on this? The middle class literally paid less in taxes due to Trump's cuts[1]. The rates were lowered across the board and the standard deduction (negligible to the 1%, a huge chunk of change to the middle class) was increased. [1] https://www.bloomberg.com/news/articles/2020-10-27/the-trump-tax-cut-wasn-t-just-for-the-rich https://www.bloomberg.com/news/articles/2020-10-27/the-trump...
  - jsilence 5y ago
    "...the Trump administration claimed that its corporate tax cuts would increase the average household income in the United States by $4,000. But two years later, there is little indication that the tax cut is even beginning to trickle down in the ways its proponents claimed." https://www.americanprogress.org/issues/economy/news/2019/09/26/475083/trumps-corporate-tax-cut-not-trickling/ https://www.americanprogress.org/issues/economy/news/2019/09... https://www.rollingstone.com/politics/politics-features/trump-covid-response-economy-jobs-taxes-inequality-1080345/ https://www.rollingstone.com/politics/politics-features/trum... https://www.salon.com/2020/12/27/50-year-study-of-tax-cuts-on-wealthy-shows-they-always-fail-to-trickle-down/ https://www.salon.com/2020/12/27/50-year-study-of-tax-cuts-o... https://www.motherjones.com/politics/2020/06/trumps-tax-cuts-were-a-disaster-naturally-republicans-want-even-more/ https://www.motherjones.com/politics/2020/06/trumps-tax-cuts...
jrsdav 5y ago
Can you point me in the right direction for more info on this? I'm curious about what some of the problems were, and why they needed to be repealed. I'm also curious what you think a sound tax policy would look like as an alternative to what Warren is proposing.
aldanor 5y ago
Except Switzerland?
littlestymaar 5y ago
I can't talk about other countries, but in my country (France) it didn't get repealed because it “didn't work”, it got repealed because it worked too well and it pissed off the billionaires who lobbied all they could to get it repealed (and even with such intensive lobby it lasted more than 30 years and survived several conservative majorities).
einpoklum 5y ago
Yeah, peace doesn't work too, every single European country that's tried it has reneged on it at least once in the past century, except maybe Switzerland and the Vatican. More seriously though, issues like wealth taxation, capital gains taxation, inheritance taxes etc. are I would say more of a reflection of the relative strength of large property owners (a.k.a. "Capitalists" or "The 1%" to use other colloquial terms) versus the rest of the populace, to set economic-cultural norms and influence legislation. Certainly, if such a tax is put in effect, many of the wealthy would make an effort to hide their assets away, possibly even abroad. But if the (federal) state wanted to cope with or overcome this potential tendency - which it really does not in the ultra-bought-off US political system, including Ms. Warren - there are many ways it could do so, both on the national and international levels. Not to mention how US corporations already employ asset and activity off-shoring to evade taxation.
X6S1x6Okd1st 5y ago
Germany: Discontinued Finland: Discontinued Luxembourg: Discontinued Sweden: Discontinued France: Discontinued* Spain: Current Netherlands: Current Norway: Current Switzerland: Current Italy: Current, but excludes assets held within the country Belgium: Current So 5 discontinued & 6 current? That doesn't seem like "Almost every single" https://en.wikipedia.org/wiki/Wealth_tax#Current_examples https://en.wikipedia.org/wiki/Wealth_tax#Current_examples Do you have a better source for what countries had it an discontinued it? For what it's worth I am here considering Financial property exclusively, France still has it's property tax which can be considered a wealth tax. I am struggling to find write ups that don't just echo "they all repealed it" but list the specific countries.
- RandomLensman 5y ago
  Germany discontinued it after it was struck down by the supreme court because it only taxed liquid/easy to measure wealth. Any new wealth tax would have to extend to all forms of wealth and would therefore be very costly to administrate. Successive governments have so far refrained from creating a new version. In fairness, the "old" wealth tax did not bring a lot of revenue.
- vonmoltke 5y ago
  From the article you cited (just above the examples): > In 1990, about a dozen European countries had a wealth tax, but by 2019, all but four had eliminated the tax because of the difficulties and costs associated with both design and enforcement. Belgium, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019 with net wealth taxes accounting for 1.1% of overall tax revenues in Norway, 0.55% in Spain, and 3.6% in Switzerland for 2017. The citation for those statements links back to the OECD, so they apparently don't count the Italian and Dutch taxes as "wealth taxes". The NPR transcript linked elsewhere says only three countries have it, so that interviewee may not be counting Belgium either (since the tax is solely on financial instruments and not total wealth).
  - X6S1x6Okd1st 5y ago
    Yeah I'm finding it hard to get a coherent count.

vmception 5y ago

The US also repealed its wealth tax promptly after introduction in the 90s.

aantix 5y ago

Why don't wealth taxes work? Which countries repealed?

lbriner 5y ago
I guess they only work if everyone uses them, otherwise the danger is that a billionaire takes their business elsewhere.
baggy_trough 5y ago
For example, that well known bastion of fascist right-wing policies, France. https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth
cscurmudgeon 5y ago
https://www.npr.org/2019/03/01/699261950/why-a-wealth-tax-didnt-work-in-europe https://www.npr.org/2019/03/01/699261950/why-a-wealth-tax-di... > ROSALSKY: In 1990, there were 12 countries in Europe that had a wealth tax. Today there are only three. Perret says they didn't work for a lot of reasons. Among other things, it costs a lot to enforce. It pushed rich people out of the country, and the wealth taxes didn't raise a lot of revenue. But > ROSALSKY: But Warren says that her proposal, which has no exemptions, will play out differently in the United States. Greg Rosalsky, NPR News. Unfortunately, nothing in her proposal justifies that. Why can't companies and people just move out of the US to avoid this? Singapore or other countries will readily welcome them.
- littlestymaar 5y ago
  > Perret says they didn't work for a lot of reasons. Among other things, it costs a lot to enforce. It pushed rich people out of the country, and the wealth taxes didn't raise a lot of revenue. In France at least, it has been a topic of political debate for decades before the recent abolition and what's clear at this point is that it costed much less than what it brought (both in terms of law enforcement, and in terms of rich people moving out of the country). > Unfortunately, nothing in her proposal justifies that. Why can't companies and people just move out of the US to avoid this? A wealth tax isn't a tax on a company, it's a tax on the owner of the company so moving the company won't help here. And the owner leaving the US won't help either, since they will still have to pay taxes as long as they remain a US citizen. Renouncing to US citizenship would still be an option of course, but I'd expect the opportunity cost would be much higher than the cost of the tax itself.
  - cscurmudgeon 5y ago
    > . Renouncing to US citizenship would still be an option of course, but I'd expect the opportunity cost would be much higher than the cost of the tax itself. Why? In 2021, a lot of countries have US levels or better infrastructure. The owner can reside outside the US and still make products for the US and the world. > Americans Gave Up Citizenship in Record Numbers in 2020, Up Triple From 2019, Reports Tax Specialists Americans Overseas https://www.prnewswire.com/news-releases/americans-gave-up-citizenship-in-record-numbers-in-2020-up-triple-from-2019-reports-tax-specialists-americans-overseas-301222817.html https://www.prnewswire.com/news-releases/americans-gave-up-c...
- ulkram 5y ago
  not an expert, but I thought the US is unique in that you can't escape taxes unless you renounce citizenship. and even then, there's an exit tax
  - cscurmudgeon 5y ago
    Renounce, pay the tax once and live free?
puchatek 5y ago
Germany suspended it's wealth tax and some parties are now contemplating whether to reactivate it. Might be just pre-election noise but who knows

nerbert 5y ago

It's not because they repealed them that they don't work. It could also be a symptom of the current times in which wealthy people became extremely good at influencing politics to reinforce their position.

motives 5y ago
This is a point worth emphasizing, a tax being repealed does not necessarily imply a lack of efficacy, due to the aforementioned reasons of political influence/corruption etc. Switzerland has done very well with a global wealth tax, arguably being the highest standard of living in Europe.

javert 5y ago

America forces people to renounce citizenship to avoid high taxes (unlike every other country in the world where you can just leave the country), so the people who flee Warren's wealth tax will not ever be coming back.

soberpeach 5y ago

It depends how the wealth tax is implemented. European wealth taxes were primarily on capital like stocks, which are extremely easy to move, even easier than income. A wealth tax on land (an LVT) is literally impossible to avoid however since you can't move the land.

umeshunni 5y ago
> A wealth tax on land (an LVT) is literally impossible to avoid however since you can't move the land. Yeah, those are called property taxes and already exist.
- soberpeach 5y ago
  Property taxes tax buildings as well, a Land Value Tax is purely a tax on the land and doesn't change whether you have a building on it or not.

jsilence 5y ago

Yeah, not taxing the rich also does not work. See the trillion Dollar tax break Pres. Trump and the GOP implemented. The savings were supposed to somehow trickle down to the "lower decks", but this has proven not to happen. Meanwhile the ultra rich are getting ultra richer and the rest is getting poorer. So lets globally coordinated tax the rich for a while in a way that they can not evade their net wealth to some other country and lets see how well that works.

dantheman 5y ago
The rich already pay almost all of the taxes anyway. The government just needs to do less to balance the budget.
- evilos 5y ago
  Well that is expected when they own most of the capital/money. That's not really a factor or surprising. What is important is how much a person is paying as a function of how rich they are. Rich people get to pay way less and it's not fair. They can get around tax laws because their cash flows don't look like the average citizen's tax flows.
dahfizz 5y ago
> The savings were supposed to somehow trickle down to the "lower decks", but this has proven not to happen. Do you have more info on this? The middle class literally paid less in taxes due to Trump's cuts[1]. The rates were lowered across the board and the standard deduction (negligible to the 1%, a huge chunk of change to the middle class) was increased. [1] https://www.bloomberg.com/news/articles/2020-10-27/the-trump-tax-cut-wasn-t-just-for-the-rich https://www.bloomberg.com/news/articles/2020-10-27/the-trump...
- jsilence 5y ago
  "...the Trump administration claimed that its corporate tax cuts would increase the average household income in the United States by $4,000. But two years later, there is little indication that the tax cut is even beginning to trickle down in the ways its proponents claimed." https://www.americanprogress.org/issues/economy/news/2019/09/26/475083/trumps-corporate-tax-cut-not-trickling/ https://www.americanprogress.org/issues/economy/news/2019/09... https://www.rollingstone.com/politics/politics-features/trump-covid-response-economy-jobs-taxes-inequality-1080345/ https://www.rollingstone.com/politics/politics-features/trum... https://www.salon.com/2020/12/27/50-year-study-of-tax-cuts-on-wealthy-shows-they-always-fail-to-trickle-down/ https://www.salon.com/2020/12/27/50-year-study-of-tax-cuts-o... https://www.motherjones.com/politics/2020/06/trumps-tax-cuts-were-a-disaster-naturally-republicans-want-even-more/ https://www.motherjones.com/politics/2020/06/trumps-tax-cuts...

jrsdav 5y ago

Can you point me in the right direction for more info on this? I'm curious about what some of the problems were, and why they needed to be repealed. I'm also curious what you think a sound tax policy would look like as an alternative to what Warren is proposing.

aldanor 5y ago

Except Switzerland?

littlestymaar 5y ago

I can't talk about other countries, but in my country (France) it didn't get repealed because it “didn't work”, it got repealed because it worked too well and it pissed off the billionaires who lobbied all they could to get it repealed (and even with such intensive lobby it lasted more than 30 years and survived several conservative majorities).

einpoklum 5y ago

Yeah, peace doesn't work too, every single European country that's tried it has reneged on it at least once in the past century, except maybe Switzerland and the Vatican. More seriously though, issues like wealth taxation, capital gains taxation, inheritance taxes etc. are I would say more of a reflection of the relative strength of large property owners (a.k.a. "Capitalists" or "The 1%" to use other colloquial terms) versus the rest of the populace, to set economic-cultural norms and influence legislation. Certainly, if such a tax is put in effect, many of the wealthy would make an effort to hide their assets away, possibly even abroad. But if the (federal) state wanted to cope with or overcome this potential tendency - which it really does not in the ultra-bought-off US political system, including Ms. Warren - there are many ways it could do so, both on the national and international levels. Not to mention how US corporations already employ asset and activity off-shoring to evade taxation.

X6S1x6Okd1st 5y ago

Germany: Discontinued Finland: Discontinued Luxembourg: Discontinued Sweden: Discontinued France: Discontinued* Spain: Current Netherlands: Current Norway: Current Switzerland: Current Italy: Current, but excludes assets held within the country Belgium: Current So 5 discontinued & 6 current? That doesn't seem like "Almost every single" https://en.wikipedia.org/wiki/Wealth_tax#Current_examples https://en.wikipedia.org/wiki/Wealth_tax#Current_examples Do you have a better source for what countries had it an discontinued it? For what it's worth I am here considering Financial property exclusively, France still has it's property tax which can be considered a wealth tax. I am struggling to find write ups that don't just echo "they all repealed it" but list the specific countries.

RandomLensman 5y ago
Germany discontinued it after it was struck down by the supreme court because it only taxed liquid/easy to measure wealth. Any new wealth tax would have to extend to all forms of wealth and would therefore be very costly to administrate. Successive governments have so far refrained from creating a new version. In fairness, the "old" wealth tax did not bring a lot of revenue.
vonmoltke 5y ago
From the article you cited (just above the examples): > In 1990, about a dozen European countries had a wealth tax, but by 2019, all but four had eliminated the tax because of the difficulties and costs associated with both design and enforcement. Belgium, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019 with net wealth taxes accounting for 1.1% of overall tax revenues in Norway, 0.55% in Spain, and 3.6% in Switzerland for 2017. The citation for those statements links back to the OECD, so they apparently don't count the Italian and Dutch taxes as "wealth taxes". The NPR transcript linked elsewhere says only three countries have it, so that interviewee may not be counting Belgium either (since the tax is solely on financial instruments and not total wealth).
- X6S1x6Okd1st 5y ago
  Yeah I'm finding it hard to get a coherent count.