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I'm just a run of the mill average joe, who has a rock that has been in my family for generations. Turns out some weird little cult likes my rock and wants to

I'm just a run of the mill average joe, who has a rock that has been in my family for generations. Turns out some weird little cult likes my rock and wants to buy it for $1B. Should I be forced to sell my rock, because I'm getting a $500M tax bill from the government because some weird little cult said they would pay $1B for it - regardless of whether I want to sell my rock?

thefaux 4y ago
Why is the rock yours? How did your family attain ownership of it? If the rock means little to you, why should you have it rather than the cult that actually values it? What if the cult wants to preserve the rock but you want to destroy it even though that will cause great pain to those who care about it? Why should you have permanent ownership of a rock just because your parents had it?
- elefanten 4y ago
  You set the table to abolish the notion of property. It's hard to extrapolate what effects that would have on modern societies... it hasn't really been tried. I'm not saying it's an inherently bad idea, but the proponents of that kind of idea always seem to paint rosy visions based on extrapolations from inappropriate samples. Maybe you can say you don't have to fully abolish property. But it remains especially hard to predict what second order behaviors any particular implementation would bring about, and what steady state would result from them. Per your example, if the expected ruling of society would be that gp doesn't get to keep the rock because they don't "care" about it... well, maybe people in their position would suddenly find themselves caring about the rock very greatly. Not even cynically -- if the choice presented to you is "value or no value", the limbic system suddenly becomes very persuasive.
- oh_sigh 4y ago
  > Why is the rock yours? How did your family attain ownership of it? The rock is mine because my family bought land a few hundred years ago, and the previous owner thought the rock was ugly and let it for us. > If the rock means little to you, why should you have it rather than the cult that actually values it? The rock means a lot to me, because it reminds me of my ancestors. I value it, but I just don't have a billion dollars to attach to it as its value. > What if the cult wants to preserve the rock but you want to destroy it even though that will cause great pain to those who care about it? I dunno. I think it is my rock and I can do with it what I want. But I don't want to destroy it, I just want to keep it where it has been for the past 200 years, near my family home's fireplace. > Why should you have permanent ownership of a rock just because your parents had it? Because that's how ownership works. If anyone can come take anything from you at any point, then I don't think you can ever be considered to own something.
Apocryphon 4y ago
This strawman parable is so elegant in its contrivance that it deserves a Nebula Award.
- googlryas 4y ago
  Can you explain how it is a strawman? I've never seen any kind of wealth tax proposed that takes into account how the wealth was acquired, or what form the wealth was in.
  - Apocryphon 4y ago
    It is an incredibly contrived, fantastical scenario that is too grating to even consider.
    - googlryas 4y ago
      Of course it is a contrived, fantastical scenario. But the point is: Does it meaningfully deviate from the key points for any wealth tax scenario?
      - Apocryphon 4y ago
        A wealth tax scenario, like all taxes in real life, will have its share of exceptions, carve-outs, and loopholes. Meaning the wealth assessment process will inevitably be far more involved than "a weird little cult offered a billion dollars for it." Now, from a parable perspective, does the post mirror the principle of how wealth taxes work? Maybe, if you're willing to equate the entire market (or whatever communal entity we're using for the basis of assessment) to a weird little cult.
        googlryas 4y ago
        Ok, it is not a weird little cult, but literally everyone in the world who wants my rock because it is so beautiful. I don't see how that tangibly affects any part of the parable - which is forcing me to sell something I own because someone else with more money than I have wants it.
evanlivingston 4y ago
Yes? Whether you're receiving the value of the asset or not, you're locking up the value of the asset and preventing a larger group of people from benefiting from the value of the asset, which is sort of the point of a wealth tax.
- oh_sigh 4y ago
  What is the locked up value of the rock? I like it because it reminds me of my grandfather, and the cult that will buy it will lock it in their storage room. My point is: With a wealth tax, anyone with money can take anything they want from anyone without money, even if the person without money doesn't value something in the same way that the person with money does.
  - dlp211 4y ago
    This is a contrived example that you've twisted yourself in knots to try and justify. There isn't a person on this planet that wouldn't sell an heirloom for $1 Billion unless the heirloom was actually worth ballpark $1 Billion. The people that wouldn't sell it for a $1 Billion are the people that would give it a way for free, ie: those that have little value for money.
    - dcow 4y ago
      No it's really not. It's an illustrative example of how a wealth tax would (fail to) work. The issue at the core is that items only have value while they are exchanged. Fiat is the only thing with the characteristic of persistent value. So trying to tax standing wealth is fraught because wealth doesn't actually exist in that form.
      - Apocryphon 4y ago
        Then simply don't tax fixed assets. Sure, sure, then people will simply avoid taxes by converting cash and other assets into properties that are not directly taxable, but that's just how these cat-and-mouse games go.
trgn 4y ago
There's a great thought proposal on how to tax assets fairly. In this system, you are taxed at the self-assessed worth of an asset. However, if somebody bids over that price, you are obliged either to sell it to them, or raise your self-assessment. It's somewhat of a game (joke perhaps), usually used in the context of ways to fairly assess land value.
flashgordon 4y ago
So here is the thing. Your rock, your wish. It is wierd when you get to take interest free lines of credit on the 1B valuation on the rock and never pay the 500m in taxes :)
- adastra22 4y ago
  Either the rock gets sold and the income is realized and the taxes are paid then, or the rock ends up being worthless and the loan margin called for possession of the rock and the remaining value is taxed as income. Either way the taxes get paid in the end. Tax deference is not tax avoidance.
  - whimsicalism 4y ago
    I have the rock, it is now worth 1 billion dollars. I take out a 50 million dollar loan from the rock and put it into the stock market, which lets say has 2% average real returns over interest (probably low if i have 1 billion in collateral). I pass the rock on to my children and die 20 years later. The 50 million is now worth 74 million. Both the rock and 74 million are stepped up to their current value when I pass it on to my children. The children repay the loan with their 50 million and now have 24 million and the 1 billion dollar rock still, tax free. How is that not tax avoidance?
    - adastra22 4y ago
      Your issue here is the cost-basis step-up on inheritance, not anything to do with loans.
      - whimsicalism 4y ago
        I was just explaining how tax deference can be tax avoidance.
        trgn 4y ago
        That's the key one. The tax code, today, in practice, already frowns very much on tax deference, and tries to inhibit it when possible. The AMT-schedule is purposely designed to pull tax forward, and precisely discourage strategies for tax deference e.g. to counter the abuses that would arise by using stock-based (or cult rocks) compensation to avoid income tax. Property tax (which is a wealth tax) is another way to siphon off tax on unrealized wealth.
colinmhayes 4y ago
Yes, if your rock is worth twice as much to the cult as it is to you you should have to sell it.
- dcow 4y ago
  No. The rock is worth vastly more to the owner than the cult which is why they won't sell it. However, the value is intrinsic... it's priceless. It's worth infinitely much to the owner regardless of how much anybody else thinks it should be worth. Therefore, it's impossibly to tax the owner infinitely for their intrinsically valuable rock...
yunohn 4y ago
I love how this thread is full of people simping for billionaires with absolutely ridiculous strawman scenarios like this one…
- googlryas 4y ago
  Can you explain how it is a strawman? Someone else accused it of being a strawman, but then could only claim that it is "contrived", which is not the same as a strawman. So where's the strawman? Would the person in this scenario not be affected by a proposed wealth tax? Also, I don't really get how it is "simping for billionaires" in the slightest. If I said that billionaires shouldn't be pulled from their mansions and lynched, am I simping for them too?
  - owisd 4y ago
    It's not a straw man, I believe a better idiom would be 'the tail wagging the dog', i.e. you're using an extreme edge case to argue against the big picture proposal. A real tax would include the small picture details: payment plans, equity swaps, valuation tribunals, etc to cover the oddball cases. But none of that would matter, you would sell it and net the $500M.
    - googlryas 4y ago
      Even with payment plants ,equity swaps, valuation tribunals, it would still be the case that someone with more money than me can force me to sell anything I own to them, by placing a value higher than I can pay on it?
      - yunohn 4y ago
        I find it odd that you think that amidst this world of legal tomfoolery and loopholes - a wealth tax could not be conceived that doesn’t force artificial valuations and liquidations.
Johnny555 4y ago
Should I be forced to sell my rock, because I'm getting a $500M tax bill from the government because some weird little cult said they would pay $1B for it - regardless of whether I want to sell my rock? If you don't want to sell your rock, then set up a family trust to hold the rock with the provision that it can never be sold, then the rock will have effectively zero taxable value and you can keep it in the family forever. If you don't want to do that because you might want to sell it some day, then it's not really a family heirloom, it's an investment. Or, put the rock in a trust, tell the cult that they can take ownership in 100 years and have access to it once a year for ceremonies if they'll pay you $100M today.

thefaux 4y ago

Why is the rock yours? How did your family attain ownership of it? If the rock means little to you, why should you have it rather than the cult that actually values it? What if the cult wants to preserve the rock but you want to destroy it even though that will cause great pain to those who care about it? Why should you have permanent ownership of a rock just because your parents had it?

elefanten 4y ago
You set the table to abolish the notion of property. It's hard to extrapolate what effects that would have on modern societies... it hasn't really been tried. I'm not saying it's an inherently bad idea, but the proponents of that kind of idea always seem to paint rosy visions based on extrapolations from inappropriate samples. Maybe you can say you don't have to fully abolish property. But it remains especially hard to predict what second order behaviors any particular implementation would bring about, and what steady state would result from them. Per your example, if the expected ruling of society would be that gp doesn't get to keep the rock because they don't "care" about it... well, maybe people in their position would suddenly find themselves caring about the rock very greatly. Not even cynically -- if the choice presented to you is "value or no value", the limbic system suddenly becomes very persuasive.
oh_sigh 4y ago
> Why is the rock yours? How did your family attain ownership of it? The rock is mine because my family bought land a few hundred years ago, and the previous owner thought the rock was ugly and let it for us. > If the rock means little to you, why should you have it rather than the cult that actually values it? The rock means a lot to me, because it reminds me of my ancestors. I value it, but I just don't have a billion dollars to attach to it as its value. > What if the cult wants to preserve the rock but you want to destroy it even though that will cause great pain to those who care about it? I dunno. I think it is my rock and I can do with it what I want. But I don't want to destroy it, I just want to keep it where it has been for the past 200 years, near my family home's fireplace. > Why should you have permanent ownership of a rock just because your parents had it? Because that's how ownership works. If anyone can come take anything from you at any point, then I don't think you can ever be considered to own something.

Apocryphon 4y ago

This strawman parable is so elegant in its contrivance that it deserves a Nebula Award.

googlryas 4y ago
Can you explain how it is a strawman? I've never seen any kind of wealth tax proposed that takes into account how the wealth was acquired, or what form the wealth was in.
- Apocryphon 4y ago
  It is an incredibly contrived, fantastical scenario that is too grating to even consider.
  - googlryas 4y ago
    Of course it is a contrived, fantastical scenario. But the point is: Does it meaningfully deviate from the key points for any wealth tax scenario?
    - Apocryphon 4y ago
      A wealth tax scenario, like all taxes in real life, will have its share of exceptions, carve-outs, and loopholes. Meaning the wealth assessment process will inevitably be far more involved than "a weird little cult offered a billion dollars for it." Now, from a parable perspective, does the post mirror the principle of how wealth taxes work? Maybe, if you're willing to equate the entire market (or whatever communal entity we're using for the basis of assessment) to a weird little cult.
      - googlryas 4y ago
        Ok, it is not a weird little cult, but literally everyone in the world who wants my rock because it is so beautiful. I don't see how that tangibly affects any part of the parable - which is forcing me to sell something I own because someone else with more money than I have wants it.

evanlivingston 4y ago

Yes? Whether you're receiving the value of the asset or not, you're locking up the value of the asset and preventing a larger group of people from benefiting from the value of the asset, which is sort of the point of a wealth tax.

oh_sigh 4y ago
What is the locked up value of the rock? I like it because it reminds me of my grandfather, and the cult that will buy it will lock it in their storage room. My point is: With a wealth tax, anyone with money can take anything they want from anyone without money, even if the person without money doesn't value something in the same way that the person with money does.
- dlp211 4y ago
  This is a contrived example that you've twisted yourself in knots to try and justify. There isn't a person on this planet that wouldn't sell an heirloom for $1 Billion unless the heirloom was actually worth ballpark $1 Billion. The people that wouldn't sell it for a $1 Billion are the people that would give it a way for free, ie: those that have little value for money.
  - dcow 4y ago
    No it's really not. It's an illustrative example of how a wealth tax would (fail to) work. The issue at the core is that items only have value while they are exchanged. Fiat is the only thing with the characteristic of persistent value. So trying to tax standing wealth is fraught because wealth doesn't actually exist in that form.
    - Apocryphon 4y ago
      Then simply don't tax fixed assets. Sure, sure, then people will simply avoid taxes by converting cash and other assets into properties that are not directly taxable, but that's just how these cat-and-mouse games go.

trgn 4y ago

There's a great thought proposal on how to tax assets fairly. In this system, you are taxed at the self-assessed worth of an asset. However, if somebody bids over that price, you are obliged either to sell it to them, or raise your self-assessment. It's somewhat of a game (joke perhaps), usually used in the context of ways to fairly assess land value.

flashgordon 4y ago

So here is the thing. Your rock, your wish. It is wierd when you get to take interest free lines of credit on the 1B valuation on the rock and never pay the 500m in taxes :)

adastra22 4y ago
Either the rock gets sold and the income is realized and the taxes are paid then, or the rock ends up being worthless and the loan margin called for possession of the rock and the remaining value is taxed as income. Either way the taxes get paid in the end. Tax deference is not tax avoidance.
- whimsicalism 4y ago
  I have the rock, it is now worth 1 billion dollars. I take out a 50 million dollar loan from the rock and put it into the stock market, which lets say has 2% average real returns over interest (probably low if i have 1 billion in collateral). I pass the rock on to my children and die 20 years later. The 50 million is now worth 74 million. Both the rock and 74 million are stepped up to their current value when I pass it on to my children. The children repay the loan with their 50 million and now have 24 million and the 1 billion dollar rock still, tax free. How is that not tax avoidance?
  - adastra22 4y ago
    Your issue here is the cost-basis step-up on inheritance, not anything to do with loans.
    - whimsicalism 4y ago
      I was just explaining how tax deference can be tax avoidance.
      - trgn 4y ago
        That's the key one. The tax code, today, in practice, already frowns very much on tax deference, and tries to inhibit it when possible. The AMT-schedule is purposely designed to pull tax forward, and precisely discourage strategies for tax deference e.g. to counter the abuses that would arise by using stock-based (or cult rocks) compensation to avoid income tax. Property tax (which is a wealth tax) is another way to siphon off tax on unrealized wealth.

colinmhayes 4y ago

Yes, if your rock is worth twice as much to the cult as it is to you you should have to sell it.

dcow 4y ago
No. The rock is worth vastly more to the owner than the cult which is why they won't sell it. However, the value is intrinsic... it's priceless. It's worth infinitely much to the owner regardless of how much anybody else thinks it should be worth. Therefore, it's impossibly to tax the owner infinitely for their intrinsically valuable rock...

yunohn 4y ago

I love how this thread is full of people simping for billionaires with absolutely ridiculous strawman scenarios like this one…

googlryas 4y ago
Can you explain how it is a strawman? Someone else accused it of being a strawman, but then could only claim that it is "contrived", which is not the same as a strawman. So where's the strawman? Would the person in this scenario not be affected by a proposed wealth tax? Also, I don't really get how it is "simping for billionaires" in the slightest. If I said that billionaires shouldn't be pulled from their mansions and lynched, am I simping for them too?
- owisd 4y ago
  It's not a straw man, I believe a better idiom would be 'the tail wagging the dog', i.e. you're using an extreme edge case to argue against the big picture proposal. A real tax would include the small picture details: payment plans, equity swaps, valuation tribunals, etc to cover the oddball cases. But none of that would matter, you would sell it and net the $500M.
  - googlryas 4y ago
    Even with payment plants ,equity swaps, valuation tribunals, it would still be the case that someone with more money than me can force me to sell anything I own to them, by placing a value higher than I can pay on it?
    - yunohn 4y ago
      I find it odd that you think that amidst this world of legal tomfoolery and loopholes - a wealth tax could not be conceived that doesn’t force artificial valuations and liquidations.

Johnny555 4y ago

Should I be forced to sell my rock, because I'm getting a $500M tax bill from the government because some weird little cult said they would pay $1B for it - regardless of whether I want to sell my rock? If you don't want to sell your rock, then set up a family trust to hold the rock with the provision that it can never be sold, then the rock will have effectively zero taxable value and you can keep it in the family forever. If you don't want to do that because you might want to sell it some day, then it's not really a family heirloom, it's an investment. Or, put the rock in a trust, tell the cult that they can take ownership in 100 years and have access to it once a year for ceremonies if they'll pay you $100M today.