5 ms·

This isn't true. There are lots of recorded instances of wealth taxes (e.g. France prior to the abolition of the ISF several years ago; many countries which lev

by whakim 5y ago

This isn't true. There are lots of recorded instances of wealth taxes (e.g. France prior to the abolition of the ISF several years ago; many countries which levied temporary wealth taxes after WWII, etc.)

lokedhs 5y ago
Sweden did the same. A lot of people suffered during the dot com bust because they were taxed on enormous unrealised profits that had completely disappeared by the time they had to pay them (because the stock had tanked)
- WalterBright 5y ago
  That happened to a friend of mine in the US. He had a "taxable event" when his stock options vested. By the time the tax bill was due, his stock was worthless, and he went bankrupt. He lost his home and last I saw was living in an RV.
  - chii 5y ago
    That's a different situation. Stock options are the same as having a cash payment, which is then immediately used to purchase the stock. It's correct to tax stock options when they vest. > By the time the tax bill was due, his stock was worthless if you could not afford the tax bill with free cashflow, you need to sell to cover. Not selling means you're taking the tax debt owed, and gambling it on stocks. It sucks that your friend lost everything - often people who have vested stocks don't think about the consequences of what they're doing, and just go for the greediest (and most risky) option of holding and hoping.
    - WalterBright 5y ago
      He did not realize that he would owe income taxes on the difference between the option price and the value of the stock the day he bought it. He thought the option price would be his basis and he'd owe capital gains when he sold the stock. That was the way things used to be, but Congress had changed the rules. Quite a few people have been caught unawares by that.
WalterBright 5y ago
There are indeed. And those countries wound up repealing them because of the disastrous effects.
- whakim 5y ago
  Most evidence suggests that wealth taxes levied in the past have indeed reduced inequality and have not led to the type of tax avoidance their detractors would suggest.
  - WalterBright 5y ago
    The WSJ points out: "Complexity is one reason European countries, including France, Germany and Sweden, abandoned broad-based wealth taxes. Many of the rich dodged wealth taxes by exploiting carve-outs or moving. The very rich will find ways to avoid confiscatory taxes, but bad tax policy distorts investment. Sweden abolished its wealth tax in 2007 following an exodus of capital and business tycoons. France repealed its net wealth tax in 2018, estimating that some 10,000 people with 35 billion euros worth of assets had left in the previous 15 years for tax reasons. The government was losing revenue from income taxes that the wealthy would have paid." https://www.wsj.com/articles/the-democrats-wealth-tax-mirage-billionaires-janet-yellen-kyrsten-sinema-joe-manchin-11635197950 https://www.wsj.com/articles/the-democrats-wealth-tax-mirage...
    - whakim 5y ago
      Sure, some people will move their assets around in order to avoid wealth taxes (to which there are, of course, solutions). That being said, in France revenue from the wealth tax grew at more than twice the rate of GDP from 1990-2018. Which means that even though some people were avoiding the tax, and oversight was extremely lax, there's no evidence that it was being serially evaded. And this is in the context of the European Union, perhaps the most hostile environment to wealth taxes that you can imagine given the free flows of people and capital.
      - WalterBright 5y ago

by whakim 5y ago

lokedhs 5y ago

Sweden did the same. A lot of people suffered during the dot com bust because they were taxed on enormous unrealised profits that had completely disappeared by the time they had to pay them (because the stock had tanked)

WalterBright 5y ago
That happened to a friend of mine in the US. He had a "taxable event" when his stock options vested. By the time the tax bill was due, his stock was worthless, and he went bankrupt. He lost his home and last I saw was living in an RV.
- chii 5y ago
  That's a different situation. Stock options are the same as having a cash payment, which is then immediately used to purchase the stock. It's correct to tax stock options when they vest. > By the time the tax bill was due, his stock was worthless if you could not afford the tax bill with free cashflow, you need to sell to cover. Not selling means you're taking the tax debt owed, and gambling it on stocks. It sucks that your friend lost everything - often people who have vested stocks don't think about the consequences of what they're doing, and just go for the greediest (and most risky) option of holding and hoping.
  - WalterBright 5y ago
    He did not realize that he would owe income taxes on the difference between the option price and the value of the stock the day he bought it. He thought the option price would be his basis and he'd owe capital gains when he sold the stock. That was the way things used to be, but Congress had changed the rules. Quite a few people have been caught unawares by that.

WalterBright 5y ago

There are indeed. And those countries wound up repealing them because of the disastrous effects.

whakim 5y ago
Most evidence suggests that wealth taxes levied in the past have indeed reduced inequality and have not led to the type of tax avoidance their detractors would suggest.
- WalterBright 5y ago
  The WSJ points out: "Complexity is one reason European countries, including France, Germany and Sweden, abandoned broad-based wealth taxes. Many of the rich dodged wealth taxes by exploiting carve-outs or moving. The very rich will find ways to avoid confiscatory taxes, but bad tax policy distorts investment. Sweden abolished its wealth tax in 2007 following an exodus of capital and business tycoons. France repealed its net wealth tax in 2018, estimating that some 10,000 people with 35 billion euros worth of assets had left in the previous 15 years for tax reasons. The government was losing revenue from income taxes that the wealthy would have paid." https://www.wsj.com/articles/the-democrats-wealth-tax-mirage-billionaires-janet-yellen-kyrsten-sinema-joe-manchin-11635197950 https://www.wsj.com/articles/the-democrats-wealth-tax-mirage...
  - whakim 5y ago
    Sure, some people will move their assets around in order to avoid wealth taxes (to which there are, of course, solutions). That being said, in France revenue from the wealth tax grew at more than twice the rate of GDP from 1990-2018. Which means that even though some people were avoiding the tax, and oversight was extremely lax, there's no evidence that it was being serially evaded. And this is in the context of the European Union, perhaps the most hostile environment to wealth taxes that you can imagine given the free flows of people and capital.
    - WalterBright 5y ago