6 ms·

> He's supposed to pay tax on income not on wealth. Yes. That’s the trap most of these arguments for taxing the rich fall into under the current system. Having

by Swizec 5y ago

> He's supposed to pay tax on income not on wealth. Yes. That’s the trap most of these arguments for taxing the rich fall into under the current system. Having money and making money are taxed differently. If you own a house and all of your neighbors sell theirs at a 30% markup, should you pay taxes on making $300,000 (for a 1mil house) this year? Maybe … seems kinda unfair though. You didn’t participate in those transactions and made no money to pay the new taxes with. Should wealth be capped? Dunno, maybe. It would solve a lot of problems and yet feels a bit draconian. Should wealth be repatriated by the state? Eh no let’s not go there. Large swathes of Europe tried that in the past and it’s still causing problems. Should “rich people” be taxed? Yeah definitely. The hard part is defining what exactly gets taxed and how. Making people sell their assets to pay taxes on those assets seems kinda weird to me.

triceratops 5y ago
> If you own a house and all of your neighbors sell theirs at a 30% markup, should you pay taxes on making $300,000 (for a 1mil house) this year? In most places (not California) your property will likely be assessed higher and your taxes will be commensurately higher next year. Your house's increased value isn't treated like realized income, but its effect on your taxes isn't 0 either.
- deleted 5y ago
  [deleted]
- dragonwriter 5y ago
  > In most places (not California) your property will likely be assessed higher In California it will be assessed higher, there is just a cap in the rate of increase (lots of places have copied this though none in the US have as low a cap as California’s “lower of 2% or rate of general inflation”, and few combine their cap on increases with as low a cap on nominal property tax rates [1%] as California.)
- Swizec 5y ago
  > Your house's increased value isn't treated like realized income, but its effect on your taxes isn't 0 either. Yes true. My point is articles about “tax the rich” prey on people not understanding this. The narrative is that “X rich person made billions and didn’t pay the same 30% tax as you!” … no they didn’t make anything. The value of their assets went up. They might even have negative cashflow to sustain that.
  - triceratops 5y ago
    "Tax the rich" people get the details wrong, but I understand where they're coming from. For most people with a consequential net worth, that net worth is tied up in their primary residence. If its value goes up, they pay higher taxes. Even if a rental property's assessed value goes up, rent goes up. This doesn't really apply to the ultra-rich. Unless they're real-estate billionaires, and even then I'm sure they have better tax strategies than regular people.
ItsMonkk 5y ago
The wealth tax is a bad tax, but it's trying to fix a bad monetary system. When the Fed only cares about inflation and doesn't care at all about wealth inequality effect of lowered velocity, you get exactly what you incentivize. The Fed lowers interest rates. The wealthy take out loans. The wealthy buy assets with the money from those loans. The values of assets goes up. As the wealthy assets are now up, they are free to take out another loan... as all new money was just piled into markets and isn't consumed the velocity goes down, and therefore the inflation rate goes down. As the inflation rate went down... the Fed lowers interest rates. The true way to solve this issue is by having a constant velocity of the money supply. If you don't give Congress the tools to fix the monetary system, their only option is a hack.

by Swizec 5y ago

triceratops 5y ago

> If you own a house and all of your neighbors sell theirs at a 30% markup, should you pay taxes on making $300,000 (for a 1mil house) this year? In most places (not California) your property will likely be assessed higher and your taxes will be commensurately higher next year. Your house's increased value isn't treated like realized income, but its effect on your taxes isn't 0 either.

deleted 5y ago
[deleted]
dragonwriter 5y ago
> In most places (not California) your property will likely be assessed higher In California it will be assessed higher, there is just a cap in the rate of increase (lots of places have copied this though none in the US have as low a cap as California’s “lower of 2% or rate of general inflation”, and few combine their cap on increases with as low a cap on nominal property tax rates [1%] as California.)
Swizec 5y ago
> Your house's increased value isn't treated like realized income, but its effect on your taxes isn't 0 either. Yes true. My point is articles about “tax the rich” prey on people not understanding this. The narrative is that “X rich person made billions and didn’t pay the same 30% tax as you!” … no they didn’t make anything. The value of their assets went up. They might even have negative cashflow to sustain that.
- triceratops 5y ago
  "Tax the rich" people get the details wrong, but I understand where they're coming from. For most people with a consequential net worth, that net worth is tied up in their primary residence. If its value goes up, they pay higher taxes. Even if a rental property's assessed value goes up, rent goes up. This doesn't really apply to the ultra-rich. Unless they're real-estate billionaires, and even then I'm sure they have better tax strategies than regular people.

ItsMonkk 5y ago

The wealth tax is a bad tax, but it's trying to fix a bad monetary system. When the Fed only cares about inflation and doesn't care at all about wealth inequality effect of lowered velocity, you get exactly what you incentivize. The Fed lowers interest rates. The wealthy take out loans. The wealthy buy assets with the money from those loans. The values of assets goes up. As the wealthy assets are now up, they are free to take out another loan... as all new money was just piled into markets and isn't consumed the velocity goes down, and therefore the inflation rate goes down. As the inflation rate went down... the Fed lowers interest rates. The true way to solve this issue is by having a constant velocity of the money supply. If you don't give Congress the tools to fix the monetary system, their only option is a hack.