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1. The US didn't have a "wealth tax" in the 1950s, it had a very high marginal income tax rate which applied to a tiny slice of earners. 2. A wealth tax would

1. The US didn't have a "wealth tax" in the 1950s, it had a very high marginal income tax rate which applied to a tiny slice of earners. 2. A wealth tax would be hard / impossible to implement.

triceratops 5y ago
> A wealth tax would be hard / impossible to implement. What do you think property taxes are? I agree it would be really hard to tax all forms of wealth. But I'm fine with rich people hiding their wealth in artwork or stamps or whatever to save it from taxation. Keeps the money out of useful assets like stocks and houses.
- plasticchris 5y ago
  Stocks /and/ houses? How does stock have utility anything like housing?
  - tanseydavid 5y ago
    If you are seeking to become a residential home owner (occupied primary residence) then the utility of the real estate is quite different as you note. If you are purely an investor then the utility of equities vs. real estate is the same -- it is an investment.
  - sokoloff 5y ago
    If an operating business has utility, then owning a fraction of that operating business has utility.
- sokoloff 5y ago
  One massive difference: Property taxes are state and local taxes, which are not barred by the Constitution in the way that federal property/wealth taxes very likely are (absent an amendment, of course). (There is debate on this point; I personally find the side arguing that such a tax would not be barred as needing to use fairly tortured lines of reasoning to arrive at their conclusion.) If you can’t pass a wealth tax federally, then whatever state wanted to compete on having a low/zero wealth tax would find plenty of wealthy takers as residents.
- jandrewrogers 5y ago
  Property taxes are not wealth taxes in most locales. If it was then the tax on your house would only apply to the difference between your asset value and mortgage principal (liability). I can't think of any locale that lets you deduct your mortgage principal from your property tax bill. Property taxes are a common type of use tax.
  - triceratops 5y ago
    I understand what you're saying. But I don't understand why the tax needs to be based on value minus mortgage balance to be considered a wealth tax. You get use of the entire asset even if you still owe the bank money. And the tax goes up (or down) with the assessed value of the property.
francisofascii 5y ago
A land tax is actually easy to implement.
pydry 5y ago
>The US didn't have a "wealth tax" in the 1950s, it had a very high marginal income tax rate which applied to a tiny slice of earners. The net effect was the same. Putting an effective cap on income throttles wealth inequality growth. >A wealth tax would be hard / impossible to implement It absolutely would be. Any political effort to do so would be sabotaged every step of the way by institutions dedicated to protecting enormous agglomerations of private wealth. Moreover, closer it got to the finish line the more willing American oligarchs would be to flirt with political violence and ally with and organize the underlying, disorganized currents of fascism in order to keep their wealth. This is a path we've been along before, almost 100 years ago. However, the US middle class was more willing to organize and fight to protect its interests back then. There were actual communists among them and the US government was legitimately afraid enough to kowtow to their demands every so often. Not any more.
- lazide 5y ago
  You’re talking about political will/ability to implement. It’s also operationally almost impossible to implement, as what counts as ‘wealth’ is highly ambiguous, and in most cases valuing it even in the best situation is nearly impossible. In a taxation situation even more so because it isn’t changing control between disinterested parties, so there is no one who has the time to really look at and form their own opinion and holding anyone accountable to it on a short timeframe. A lot of the trump real estate scandals are from him (supposedly) manipulating real estate appraisals for favorable loan and tax purposes, and that is for something with relatively easy/straightforward/understood valuation and an army of appraisers. Private equity? Partnerships in ongoing concerns? Controlling vs non-controlling interests in various things? Trusts? There are so many valid ways to look at, account for, and structure these - and they all have wildly different values, levers to change those values, and short or long term valuations and cash flows. If you own a controlling interest in a large business, but don’t sell anything and don’t have income from it (you reinvest it in the business), that may or may not be a lot of wealth. If the business tanks without it, was the business worth anything? Or was it worth something and then it was another factor that killed it? If the business is producing a lot of cash and the owner pulls it out, that is clear measurable income and easy to quantity. To the point if you threw 5 independent evaluators at any of them you’re probably going to get 7 different actual numbers, all meaningfully different, and all of which could be argued are legitimate.
kesselvon 5y ago
The US had a whole host of laws that made pulling out cash from businesses very expensive, but investing in them very easy. So you had a strong incentive to increase salaries, hire more workers, invest in more machinery, diversify, etc. simply because getting more cash out of a business wasn't worth it
- spaetzleesser 5y ago
  "So you had a strong incentive to increase salaries, hire more workers, invest in more machinery, diversify, etc. simply because getting more cash out of a business wasn't worth it" Unfortunately they focused on increasing executive salaries and forgot about the rest.
bmitc 5y ago
> A wealth tax would be hard / impossible to implement. The "impossible to do" is a common excuse for people just not wanting to do something. The common excuse is that the ultra wealthy aren't actually cash wealthy. They have all their wealth in investments that are rarely if ever actually realized. People throw their hands up in the air and say we can't tax unrealized wealth. But how do wealthy people get cash? They borrow millions, hundreds of millions, or even billions against their unrealized wealth. So limit or tax their borrowing of this money such that it forces the realization of wealth, which would be taxed, or they are taxed on what they borrow, respectively.
- notch656a 5y ago
  Wealthy person: whoops, my wealth ended up in a bank account in Vanuatu. Unfortunately it's held by a foreign corporation there that occasionally donates to my trust. I don't have control of it, it's in control of a lawyer who has strict contractual terms by which he can only transfer into a few trusts. Really is a shame!
- nlittlepoole 5y ago
  Finally someone who gets it. It isn't impossible to do but you have to take into accoutn that it isn't realized. Imo the best way to do that is actually aggressive consumption taxes on the things that the wealthy primarily consume (vacation properties, yachts, private schools, etc). Taxing loans directly is difficult to do because I imagine you don't want to be taxing student loans or mortgages. I guess you could tax all collateralized loans above a certain collateral value but that can be gamed. So personally I prefer consumption taxes.
  - secabeen 5y ago
    > I guess you could tax all collateralized loans above a certain collateral value but that can be gamed. So personally I prefer consumption taxes. Interesting idea. We sort of already do this, we apply property taxes based on the value of the property as pegged at purchase (re-assessed over time). We could exempt loans on collateral already subject to property (or other value-based) taxes, but could then put a wealth tax on any other asset used as collateral for a loan at the collateral value agreed on by the lender.
spaetzleesser 5y ago
"2. A wealth tax would be hard / impossible to implement." This is the standard excuse for stopping any thoughts of changes in the US. Let's not even think about improvements because they are impossible anyway. A sane health care system is impossible, doing something about rising wealth inequality isn't possible, reducing opioid deaths is impossible. The only things that seem possible are things to move even more money into the hands of wealthy people. I still remember how in 2008 Congress quickly was able to produce 750 billion when the banks and the banker's money was threatened.

1. The US didn't have a "wealth tax" in the 1950s, it had a very high marginal income tax rate which applied to a tiny slice of earners. 2. A wealth tax would be hard / impossible to implement.

triceratops 5y ago

> A wealth tax would be hard / impossible to implement. What do you think property taxes are? I agree it would be really hard to tax all forms of wealth. But I'm fine with rich people hiding their wealth in artwork or stamps or whatever to save it from taxation. Keeps the money out of useful assets like stocks and houses.

plasticchris 5y ago
Stocks /and/ houses? How does stock have utility anything like housing?
- tanseydavid 5y ago
  If you are seeking to become a residential home owner (occupied primary residence) then the utility of the real estate is quite different as you note. If you are purely an investor then the utility of equities vs. real estate is the same -- it is an investment.
- sokoloff 5y ago
  If an operating business has utility, then owning a fraction of that operating business has utility.
sokoloff 5y ago
One massive difference: Property taxes are state and local taxes, which are not barred by the Constitution in the way that federal property/wealth taxes very likely are (absent an amendment, of course). (There is debate on this point; I personally find the side arguing that such a tax would not be barred as needing to use fairly tortured lines of reasoning to arrive at their conclusion.) If you can’t pass a wealth tax federally, then whatever state wanted to compete on having a low/zero wealth tax would find plenty of wealthy takers as residents.
jandrewrogers 5y ago
Property taxes are not wealth taxes in most locales. If it was then the tax on your house would only apply to the difference between your asset value and mortgage principal (liability). I can't think of any locale that lets you deduct your mortgage principal from your property tax bill. Property taxes are a common type of use tax.
- triceratops 5y ago
  I understand what you're saying. But I don't understand why the tax needs to be based on value minus mortgage balance to be considered a wealth tax. You get use of the entire asset even if you still owe the bank money. And the tax goes up (or down) with the assessed value of the property.

francisofascii 5y ago

A land tax is actually easy to implement.

pydry 5y ago

>The US didn't have a "wealth tax" in the 1950s, it had a very high marginal income tax rate which applied to a tiny slice of earners. The net effect was the same. Putting an effective cap on income throttles wealth inequality growth. >A wealth tax would be hard / impossible to implement It absolutely would be. Any political effort to do so would be sabotaged every step of the way by institutions dedicated to protecting enormous agglomerations of private wealth. Moreover, closer it got to the finish line the more willing American oligarchs would be to flirt with political violence and ally with and organize the underlying, disorganized currents of fascism in order to keep their wealth. This is a path we've been along before, almost 100 years ago. However, the US middle class was more willing to organize and fight to protect its interests back then. There were actual communists among them and the US government was legitimately afraid enough to kowtow to their demands every so often. Not any more.

lazide 5y ago
You’re talking about political will/ability to implement. It’s also operationally almost impossible to implement, as what counts as ‘wealth’ is highly ambiguous, and in most cases valuing it even in the best situation is nearly impossible. In a taxation situation even more so because it isn’t changing control between disinterested parties, so there is no one who has the time to really look at and form their own opinion and holding anyone accountable to it on a short timeframe. A lot of the trump real estate scandals are from him (supposedly) manipulating real estate appraisals for favorable loan and tax purposes, and that is for something with relatively easy/straightforward/understood valuation and an army of appraisers. Private equity? Partnerships in ongoing concerns? Controlling vs non-controlling interests in various things? Trusts? There are so many valid ways to look at, account for, and structure these - and they all have wildly different values, levers to change those values, and short or long term valuations and cash flows. If you own a controlling interest in a large business, but don’t sell anything and don’t have income from it (you reinvest it in the business), that may or may not be a lot of wealth. If the business tanks without it, was the business worth anything? Or was it worth something and then it was another factor that killed it? If the business is producing a lot of cash and the owner pulls it out, that is clear measurable income and easy to quantity. To the point if you threw 5 independent evaluators at any of them you’re probably going to get 7 different actual numbers, all meaningfully different, and all of which could be argued are legitimate.

kesselvon 5y ago

The US had a whole host of laws that made pulling out cash from businesses very expensive, but investing in them very easy. So you had a strong incentive to increase salaries, hire more workers, invest in more machinery, diversify, etc. simply because getting more cash out of a business wasn't worth it

spaetzleesser 5y ago
"So you had a strong incentive to increase salaries, hire more workers, invest in more machinery, diversify, etc. simply because getting more cash out of a business wasn't worth it" Unfortunately they focused on increasing executive salaries and forgot about the rest.

bmitc 5y ago

> A wealth tax would be hard / impossible to implement. The "impossible to do" is a common excuse for people just not wanting to do something. The common excuse is that the ultra wealthy aren't actually cash wealthy. They have all their wealth in investments that are rarely if ever actually realized. People throw their hands up in the air and say we can't tax unrealized wealth. But how do wealthy people get cash? They borrow millions, hundreds of millions, or even billions against their unrealized wealth. So limit or tax their borrowing of this money such that it forces the realization of wealth, which would be taxed, or they are taxed on what they borrow, respectively.

notch656a 5y ago
Wealthy person: whoops, my wealth ended up in a bank account in Vanuatu. Unfortunately it's held by a foreign corporation there that occasionally donates to my trust. I don't have control of it, it's in control of a lawyer who has strict contractual terms by which he can only transfer into a few trusts. Really is a shame!
nlittlepoole 5y ago
Finally someone who gets it. It isn't impossible to do but you have to take into accoutn that it isn't realized. Imo the best way to do that is actually aggressive consumption taxes on the things that the wealthy primarily consume (vacation properties, yachts, private schools, etc). Taxing loans directly is difficult to do because I imagine you don't want to be taxing student loans or mortgages. I guess you could tax all collateralized loans above a certain collateral value but that can be gamed. So personally I prefer consumption taxes.
- secabeen 5y ago
  > I guess you could tax all collateralized loans above a certain collateral value but that can be gamed. So personally I prefer consumption taxes. Interesting idea. We sort of already do this, we apply property taxes based on the value of the property as pegged at purchase (re-assessed over time). We could exempt loans on collateral already subject to property (or other value-based) taxes, but could then put a wealth tax on any other asset used as collateral for a loan at the collateral value agreed on by the lender.

spaetzleesser 5y ago

"2. A wealth tax would be hard / impossible to implement." This is the standard excuse for stopping any thoughts of changes in the US. Let's not even think about improvements because they are impossible anyway. A sane health care system is impossible, doing something about rising wealth inequality isn't possible, reducing opioid deaths is impossible. The only things that seem possible are things to move even more money into the hands of wealthy people. I still remember how in 2008 Congress quickly was able to produce 750 billion when the banks and the banker's money was threatened.