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Anytime the idea of a wealth tax is brought up, I see commenters coming out of the woodwork to say that it would be impossible to actually collect it from the w

Anytime the idea of a wealth tax is brought up, I see commenters coming out of the woodwork to say that it would be impossible to actually collect it from the wealthy. Though I will note that it seems like we are able to collect yachts and planes from Russian oligarchs now, so perhaps our techniques have advanced in the last few months.

sascha_sl 4y ago
There's an entire profession who's job it is to go full scale threat modeling on assets held directly or indirectly by the extremely rich. Seems likely they either didn't account for war sanctions or thought the impacted assets would not be worth putting behind 10 proxy legal owners for the unlikely case of such sanctions. Yachts and planes seem like they'd be particularly hard to turn into assets owned by a local proxy entity, since they move around so much.
nikanj 4y ago
It’s easier to collect from foreign billionaires who don’t have the connections. Igor will probably not fund your re-election campaign, but Musk might.
throwaway09223 4y ago
This is a different problem and has to do with privacy. The government can't compel you to disclose everything you're doing without cause, and without due process. Having a court ordered judgement entered against you is cause and is a result of due process. It's an entirely different scenario.
- pc86 4y ago
  Assuming that a wealth tax was passed, wouldn't the cause here be proper reporting and collection of said tax? You can declare illegal income on your federal return and pay taxes on it. They're not (in this hypothetical I guess?) asking what you're doing, just how much it's made you.
  - throwaway09223 4y ago
    The issue is that people can change how they own things so they don't have to disclose. The law is necessarily public and people can adjust the way they structure ownership accordingly. We see this all the time already. For example, Medicaid won't pay for your extremely expensive end of life care if you have assets. So, people give away their assets (to a trust, to family) before applying for Medicaid to cover their nursing home. It becomes a game of cat and mouse. People will adjust where they can to avoid tax. This also already happens with income tax. For example, executive compensation is primarily provided as capital gains rather than income because it's much more tax efficient. Everything is in the open. The other issue here is one of cost. The IRS has to fund the cost of analyzing filings and deciding to audit. This is very different from a post-judgement scenario.
    - roenxi 4y ago
      And the added problem that the assets need to be valued to tax them - for liquid assets this will be much more challenging than income. Things like CGT or income tax happen at the same time as a transaction in dollars so they are easy to value. Wealth taxes would be open to gaming using the same process you describe here.
    - pc86 4y ago
      I don't think there's really any way around this. It just lowers the maximum amount you can extract via that tax. You have to tax at a rate low enough where it's not worth the expense to get around it in the first place. Maybe this is enough to make a wealth tax altogether not worth it federally (how much does it cost to set up a trust and transfer assets? can't be a lot), I don't know. But I think that's all part of the calculus of whether or not it's reasonable to institute the tax in the first place.
- powerhour 4y ago
  We recently ditched privacy so I think we're getting closer to being able to have a wealth tax.
  - throwaway09223 4y ago
    Roe's finding of a fundamental right to privacy in the 14th amendment is VERY different from the rights provided by the 4th amendment, against unreasonable searches and seizures. It's a very different thing.
  - mdale 4y ago
    Love the leap & parody here. As if laws exist independently of who they are enforced against.
- grapeskin 4y ago
  The IRS has no trouble prying and finding out that you have unreported income. The idea that they can’t find out you have an unreported Picasso painting that you bought for 40 million or a beachfront mansion is silly.
kolbe 4y ago
Russian oligarch yacht seizures are a better argument for them than for you. They're worth tens of billions of dollars, and all the US can get is a nine figure boat.
- azinman2 4y ago
  Don’t forget the homes in London, and the billions in frozen bank accounts. Aka everything not in Russia or China.
  - kolbe 4y ago
    So, 10% of their net worth by leveraging what was thought to be illegal and unexpected seizures? Most of which was done by the EU. Sounds like a ringing endorsement of how the US would implement a tax that the wealthy can prepare for and happens within the rule of law.
imgabe 4y ago
Yachts and planes are physical objects and represent a tiny, tiny fraction of a billionaire's wealth. Wealth is actual ownership interest in valuable companies, which can be moved offshore or the person can renounce citizenship and relocate to a country with friendlier tax laws in the extreme case.
- hawaiianbrah 4y ago
  Renouncing citizenship has something like a 20%-of-net-worth tax
  - imgabe 4y ago
    Might still be worth it if there were a significant wealth tax and you did it in advance of an IPO or other event that greatly increased your net worth. A wealth tax would also have the effect that people expecting to generate lots of wealth would just move somewhere else to do so, or not come to the US in the first place.
roenxi 4y ago
The tax & plane seizures are 1. A surprising departure from the rules and norms - I assume probably illegal. 2. Part of a campaign designed to ruin Russia. You might have misunderstood the argument the anti-taxers (pro-property?) people are bringing up. There isn't a physical problem with taking wealth away from people, that part is very easy to execute. The problem is the 2nd order effects where it will turn into an unfair confiscation and do substantial damage to the ability of the host country to invest and prosper, bringing general ruin to us all. The fact that wealth confiscation is being deployed against Russians is no surprise from that perspective and not undermining the core argument. However, if it makes you feel better, I do agree that given that the War on Terror was pointed inwards fairly quickly I expect the techniques used in the War on Russia's Economy will also move to US home soil in the next decade and there may well be large scale wealth confiscation in the US.
- jjeaff 4y ago
  What law prohibits the seizure of foreign assets on international waters?
  - roenxi 4y ago
    I dunno. I'm not a lawyer. Possibly one of the ones against piracy? If you want to make the argument that it is literal and raw might-makes-right on the high seas, ok. But that type of barbarian world is not one I encourage and it'd be a bit stunning to find someone who wants the world to work that way. The US wouldn't do well in a world like that either, US citizens have more assets to seize than foreigners do.
    - BoorishBears 4y ago
      There's a certain irony in picking this high horse to ride, when we're taking about the response to a western european ground-war in the year 2022. As if that's not evidence of far more barbaric mechanisms at play in geopolitics...
      - 4y ago
ByteJockey 4y ago
Wait, is that what you always see as the argument against it? Whenever I've seen it brought up it's always that it would require a constitutional amendment (specifically in the US). The federal government isn't allowed to do taxes that way under the current system (Article 1 Clause 2 Section 3). Hell, the feds weren't even allowed to do a straight income tax until the 16th amendment.
- hotpotamus 4y ago
  Washington thought it was fine https://www.npr.org/2019/09/12/760148148/episode-956-the-carriage-tax https://www.npr.org/2019/09/12/760148148/episode-956-the-car... Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Who knows, perhaps that's astroturfing by troll teams employed by billionaires to try and discourage the masses. As you said, they've already got plenty of lawyers to work on it from the constitutional end - including 6 of the lawyers on the Supreme Court.
  - ByteJockey 4y ago
    > Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Huh. Weird. Well, I don't see it brought up on HN all that often (once a month tops?), so we must hang out in different circles outside of here. Anyways, you have a good one.

sascha_sl 4y ago

There's an entire profession who's job it is to go full scale threat modeling on assets held directly or indirectly by the extremely rich. Seems likely they either didn't account for war sanctions or thought the impacted assets would not be worth putting behind 10 proxy legal owners for the unlikely case of such sanctions. Yachts and planes seem like they'd be particularly hard to turn into assets owned by a local proxy entity, since they move around so much.

nikanj 4y ago

It’s easier to collect from foreign billionaires who don’t have the connections. Igor will probably not fund your re-election campaign, but Musk might.

throwaway09223 4y ago

This is a different problem and has to do with privacy. The government can't compel you to disclose everything you're doing without cause, and without due process. Having a court ordered judgement entered against you is cause and is a result of due process. It's an entirely different scenario.

pc86 4y ago
Assuming that a wealth tax was passed, wouldn't the cause here be proper reporting and collection of said tax? You can declare illegal income on your federal return and pay taxes on it. They're not (in this hypothetical I guess?) asking what you're doing, just how much it's made you.
- throwaway09223 4y ago
  The issue is that people can change how they own things so they don't have to disclose. The law is necessarily public and people can adjust the way they structure ownership accordingly. We see this all the time already. For example, Medicaid won't pay for your extremely expensive end of life care if you have assets. So, people give away their assets (to a trust, to family) before applying for Medicaid to cover their nursing home. It becomes a game of cat and mouse. People will adjust where they can to avoid tax. This also already happens with income tax. For example, executive compensation is primarily provided as capital gains rather than income because it's much more tax efficient. Everything is in the open. The other issue here is one of cost. The IRS has to fund the cost of analyzing filings and deciding to audit. This is very different from a post-judgement scenario.
  - roenxi 4y ago
    And the added problem that the assets need to be valued to tax them - for liquid assets this will be much more challenging than income. Things like CGT or income tax happen at the same time as a transaction in dollars so they are easy to value. Wealth taxes would be open to gaming using the same process you describe here.
  - pc86 4y ago
    I don't think there's really any way around this. It just lowers the maximum amount you can extract via that tax. You have to tax at a rate low enough where it's not worth the expense to get around it in the first place. Maybe this is enough to make a wealth tax altogether not worth it federally (how much does it cost to set up a trust and transfer assets? can't be a lot), I don't know. But I think that's all part of the calculus of whether or not it's reasonable to institute the tax in the first place.
powerhour 4y ago
We recently ditched privacy so I think we're getting closer to being able to have a wealth tax.
- throwaway09223 4y ago
  Roe's finding of a fundamental right to privacy in the 14th amendment is VERY different from the rights provided by the 4th amendment, against unreasonable searches and seizures. It's a very different thing.
- mdale 4y ago
  Love the leap & parody here. As if laws exist independently of who they are enforced against.
grapeskin 4y ago
The IRS has no trouble prying and finding out that you have unreported income. The idea that they can’t find out you have an unreported Picasso painting that you bought for 40 million or a beachfront mansion is silly.

kolbe 4y ago

Russian oligarch yacht seizures are a better argument for them than for you. They're worth tens of billions of dollars, and all the US can get is a nine figure boat.

azinman2 4y ago
Don’t forget the homes in London, and the billions in frozen bank accounts. Aka everything not in Russia or China.
- kolbe 4y ago
  So, 10% of their net worth by leveraging what was thought to be illegal and unexpected seizures? Most of which was done by the EU. Sounds like a ringing endorsement of how the US would implement a tax that the wealthy can prepare for and happens within the rule of law.

imgabe 4y ago

Yachts and planes are physical objects and represent a tiny, tiny fraction of a billionaire's wealth. Wealth is actual ownership interest in valuable companies, which can be moved offshore or the person can renounce citizenship and relocate to a country with friendlier tax laws in the extreme case.

hawaiianbrah 4y ago
Renouncing citizenship has something like a 20%-of-net-worth tax
- imgabe 4y ago
  Might still be worth it if there were a significant wealth tax and you did it in advance of an IPO or other event that greatly increased your net worth. A wealth tax would also have the effect that people expecting to generate lots of wealth would just move somewhere else to do so, or not come to the US in the first place.

roenxi 4y ago

The tax & plane seizures are 1. A surprising departure from the rules and norms - I assume probably illegal. 2. Part of a campaign designed to ruin Russia. You might have misunderstood the argument the anti-taxers (pro-property?) people are bringing up. There isn't a physical problem with taking wealth away from people, that part is very easy to execute. The problem is the 2nd order effects where it will turn into an unfair confiscation and do substantial damage to the ability of the host country to invest and prosper, bringing general ruin to us all. The fact that wealth confiscation is being deployed against Russians is no surprise from that perspective and not undermining the core argument. However, if it makes you feel better, I do agree that given that the War on Terror was pointed inwards fairly quickly I expect the techniques used in the War on Russia's Economy will also move to US home soil in the next decade and there may well be large scale wealth confiscation in the US.

jjeaff 4y ago
What law prohibits the seizure of foreign assets on international waters?
- roenxi 4y ago
  I dunno. I'm not a lawyer. Possibly one of the ones against piracy? If you want to make the argument that it is literal and raw might-makes-right on the high seas, ok. But that type of barbarian world is not one I encourage and it'd be a bit stunning to find someone who wants the world to work that way. The US wouldn't do well in a world like that either, US citizens have more assets to seize than foreigners do.
  - BoorishBears 4y ago
    There's a certain irony in picking this high horse to ride, when we're taking about the response to a western european ground-war in the year 2022. As if that's not evidence of far more barbaric mechanisms at play in geopolitics...
    - 4y ago

ByteJockey 4y ago

Wait, is that what you always see as the argument against it? Whenever I've seen it brought up it's always that it would require a constitutional amendment (specifically in the US). The federal government isn't allowed to do taxes that way under the current system (Article 1 Clause 2 Section 3). Hell, the feds weren't even allowed to do a straight income tax until the 16th amendment.

hotpotamus 4y ago
Washington thought it was fine https://www.npr.org/2019/09/12/760148148/episode-956-the-carriage-tax https://www.npr.org/2019/09/12/760148148/episode-956-the-car... Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Who knows, perhaps that's astroturfing by troll teams employed by billionaires to try and discourage the masses. As you said, they've already got plenty of lawyers to work on it from the constitutional end - including 6 of the lawyers on the Supreme Court.
- ByteJockey 4y ago
  > Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Huh. Weird. Well, I don't see it brought up on HN all that often (once a month tops?), so we must hang out in different circles outside of here. Anyways, you have a good one.