6 ms·

Taxing super-rich debate should start with 2% levy, says economist behind plan

22 points by kvee 2y ago

qeternity 2y ago
Billionaire wealth in the US totals $5.5T dollars. In 2024, the Federal government is projected to borrow $1.9T. And remember: billionaire wealth is mostly paper wealth. The deficit is real dollars. We have a spending problem. Not a rich people problem.
- Aerbil313 2y ago
  [flagged]
- squigz 2y ago
  Why not both?
  - namaria 2y ago
    Meme type uninspired joke comments are becoming far too prevalent...
    - squigz 2y ago
      Awww, you can do better.
      - namaria 2y ago
        I hope you hear yourself bud
- Aerroon 2y ago
  And the problem is worse in most European countries. The government spends an even larger share of the GDP.
- BugsJustFindMe 2y ago
  Welllll...first, the article's subject is global, not just the US. Second, the article definitely says "the billionaire minimum income tax proposed in the U.S. by President Joe Biden, which targets individuals with more than $100 million in wealth...would subject the entire pre-tax return on wealth for ultra-high-net-worth Americans to a minimum individual tax rate of 25%, irrespective of whether the return comes from dividends, realized capital gains or unrealized gains". So within the US perhaps it's more reasonable to talk about people with $100M rather than $1B and laugh about the name not exactly matching the number. I don't have the exact total wealth number for that threshold, but I do have the wealth of the top 0.1% in the US, whose minimum net worth is now about $50M (extrapolate 2 years from https://fred.stlouisfed.org/series/WFRBLTP1311 https://fred.stlouisfed.org/series/WFRBLTP1311), which is close enough to $100M for me, at a total of $20.7T (https://fred.stlouisfed.org/series/WFRBLTP1246 https://fred.stlouisfed.org/series/WFRBLTP1246). Third, 2% is given as a minimum starting point. Even at 5% the money would still be increasing in the market faster than that.
  - qeternity 2y ago
    You're missing the point. You could make it 100%. Confiscate all the wealth of $100m+. The government will exhaust the entirety of that surplus in a single digit number of years.
    - tracker1 2y ago
      Exactly, thanks. There's a saying you can't exercise your way out of a bad diet. You can't tax your way out of excessive spending.
- jncfhnb 2y ago
  That’s not an argument to not tax the rich
  - tracker1 2y ago
    But taxing existing wealth of billionaires is an argument for billionaires to move to another country. Taxing on exchange would disproportionately affect the wealthy but still be fair. Not just income but money exchange. Then when $B buys, sells, shorts stock it's accounted for. When goods and materials are bought or sold, it's taxes. The wealthy buy, sell, trade and rent more than poor. They'd pay more there. I find taxes on existing property just ethically and morally wrong. I don't care if it's a poor guy's bicycle or a billionaire yacht.
  - SllX 2y ago
    It is an argument against treating the rich like a piñata you can smack to fix your budgetary issues. A tax increase argument on any part of society should be centered around what you are hoping to do with those taxes: reduce borrowing, pay down public debts, increase public services (I should specify: public services which are worth the government keeping people on payroll to perform as a public service). Taxes aren’t an equalizer, they’re a government revenue stream. They’re not always even the best government revenue stream to cover every service, some can be fee-for-service, some can be covered by tariffs.
    - jncfhnb 2y ago
      Ok. Reduce borrowing. Done. The rich benefit disproportionately from societal structures. The bulk of market driven capital gains should be collected for the benefit of society. Equalizing need not come into the dialogue.
      - SllX 2y ago
        Sure—and as of 2018, I’m a little out of the loop on anything more recent, the top 1% in the US paid about 40% of US taxes—but have you considered also reducing borrowing, spending and services and then adjusting tax rates across the board down once we’ve gotten our debts down to a more manageable level?
- Sohcahtoa82 2y ago
  We have both. The federal deficit has been skyrocketing every since Reagan massively cut the top marginal rate. Combine it with crony capitalism, where government contracts go to whoever promises to kick back the most to the politicians' next campaign, "use it or lose it" budgeting that encourages wasteful spending, and we have massive over-spending. You must recognize that it's a very bad look when a state says "We're going to let poor children starve and cut $X from school lunch programs" and then in the same breath say "We're cutting taxes on 'job creators' by $X".
  - qeternity 2y ago
    Nobody is starving in the US. This is ridiculous.
    - Sohcahtoa82 2y ago
      Over 21,000 people died in the USA from malnutrition in 2022. Many suffer from food insecurity. https://www.cnn.com/2023/12/21/health/nutritional-deficiency-life-expectancy/index.html https://www.cnn.com/2023/12/21/health/nutritional-deficiency...
082349872349872 2y ago
The jurisdictions I'm aware of that have actually implemented these taxes impose per-mille, not percent.
tracker1 2y ago
This kind of assumes liquidity... A lot of wealth is tied up in stocks and physical assets. Imagine having to orchestrate selling 2% of everything you own every year. And why over a billion, why not put it at over a million, or ten? You could seize the full assets of every US Billionaire and it wouldn't cover a single year of the federal budget or dent the debt. There's no way to tax out of this hole... spending cuts need to happen, and restructuring as well. Taxes should focus on points of exchange.
- thmsths 2y ago
  There is a very good counter argument to the liquidity issue: property taxes. Most Americans have a large portion, if not all of their net worth tied up in their house. This is a very illiquid asset. Yet we have no problem taxing them at around 2%. If regular people can do it, I am sure billionaires will figure out a way to pay too.
  - tracker1 2y ago
    I don't believe that property taxes are a good thing either. In 3 years, my own property taxes alone have increased my mortgage payment by close to 30%. I think we'd be better off with exchange taxes. Every time assets, securities, currency, etc is exchanged... it gets taxed. This includes stock trades. Property taxes are a way to make people not actually own their property.
    - ryandrake 2y ago
      How on earth do property taxes increase one's mortgage payment? They don't increase the size of your loan, so should have no effect on either your interest or principal payments. You might have chosen to pay your property taxes monthly, through escrow, and thus 1/12 of your property tax is sent along with your mortgage principal and interest every month, but your actual mortgage numbers aren't changing.
      - tracker1 2y ago
        Exactly.. because it's taken monthly into escrow. The fact is, I'm paying close to 30% more than a few years ago and it's entirely because of property taxes. Nobody should have property removed simply for living another year. edit: property taxes are actually up about 400% over when I bought my home 6 years ago. They property evaluation is now close to market value, where it was much lower/less and historically had been. It's been a money grab. It's also been particularly hard on retired home owners.
fred_is_fred 2y ago
I had no idea there were so many billionaires on HN - billionaires who cannot possibly for any reason think of a way to pay taxes because as it is explained in comments here, it is simply not possible, and if it was possible they shouldn't pay because federal spending.
- slater 2y ago
  We're all just temporarily embarrassed millionaires.
- nullc 2y ago
  Well no one else is fred_is_fred, so we should all be okay with taxing fred_is_fred specifically at 100%? Billionaires already pay for an extraordinary outsized portion of federal spending, so I don't think that deceptive framing does anything except turn people against your position.
Ekaros 2y ago
My personal first step in increasing income from capital gains is to tax any stock-buyback at 50%... If company has money to buyback stock it might as well be heavily taxed... This would direct cash to dividends which then could get taxed as individual gains...
- downrightmike 2y ago
  95%, or just make it illegal again, like they did in response to the Great Depression.
  - pfannkuchen 2y ago
    Are stock buybacks really purely a tax dodge? At a high level, if a company which has taken investment in the past in return for giving up some control of the company, if they have spare cash later it seems reasonable to buy back some of that control. If available control of the company is then more scarce but the demand hasn’t changed, it’s fair that the share price goes up as a result. People on the internet seem to treat it as a loophole that is being exploited, but I don’t really see that. Should companies never be allowed to roll back share issuance?
    - wmf 2y ago
      A company cannot control itself and shares that are bought back are canceled so it doesn't really change the ownership. The effects of dividends and buybacks are the same but they are taxed differently.
      - pfannkuchen 2y ago
        It doesn’t really change the ownership? It undilutes the remaining shares. That’s why they are worth more. If undilution doesn’t really change the ownership, then logically dilution doesn’t really change the ownership either. That is straightforwardly false, therefore your statement is false. I understand the Reddit tier surface level analysis and I am questioning that, while you are just parroting it again back at me.

22 points by kvee 2y ago

Billionaire wealth in the US totals $5.5T dollars. In 2024, the Federal government is projected to borrow $1.9T. And remember: billionaire wealth is mostly paper wealth. The deficit is real dollars. We have a spending problem. Not a rich people problem.

Aerbil313 2y ago
[flagged]
squigz 2y ago
Why not both?
- namaria 2y ago
  Meme type uninspired joke comments are becoming far too prevalent...
  - squigz 2y ago
    Awww, you can do better.
    - namaria 2y ago
      I hope you hear yourself bud
Aerroon 2y ago
And the problem is worse in most European countries. The government spends an even larger share of the GDP.
BugsJustFindMe 2y ago
Welllll...first, the article's subject is global, not just the US. Second, the article definitely says "the billionaire minimum income tax proposed in the U.S. by President Joe Biden, which targets individuals with more than $100 million in wealth...would subject the entire pre-tax return on wealth for ultra-high-net-worth Americans to a minimum individual tax rate of 25%, irrespective of whether the return comes from dividends, realized capital gains or unrealized gains". So within the US perhaps it's more reasonable to talk about people with $100M rather than $1B and laugh about the name not exactly matching the number. I don't have the exact total wealth number for that threshold, but I do have the wealth of the top 0.1% in the US, whose minimum net worth is now about $50M (extrapolate 2 years from https://fred.stlouisfed.org/series/WFRBLTP1311 https://fred.stlouisfed.org/series/WFRBLTP1311), which is close enough to $100M for me, at a total of $20.7T (https://fred.stlouisfed.org/series/WFRBLTP1246 https://fred.stlouisfed.org/series/WFRBLTP1246). Third, 2% is given as a minimum starting point. Even at 5% the money would still be increasing in the market faster than that.
- qeternity 2y ago
  You're missing the point. You could make it 100%. Confiscate all the wealth of $100m+. The government will exhaust the entirety of that surplus in a single digit number of years.
  - tracker1 2y ago
    Exactly, thanks. There's a saying you can't exercise your way out of a bad diet. You can't tax your way out of excessive spending.
jncfhnb 2y ago
That’s not an argument to not tax the rich
- tracker1 2y ago
  But taxing existing wealth of billionaires is an argument for billionaires to move to another country. Taxing on exchange would disproportionately affect the wealthy but still be fair. Not just income but money exchange. Then when $B buys, sells, shorts stock it's accounted for. When goods and materials are bought or sold, it's taxes. The wealthy buy, sell, trade and rent more than poor. They'd pay more there. I find taxes on existing property just ethically and morally wrong. I don't care if it's a poor guy's bicycle or a billionaire yacht.
- SllX 2y ago
  It is an argument against treating the rich like a piñata you can smack to fix your budgetary issues. A tax increase argument on any part of society should be centered around what you are hoping to do with those taxes: reduce borrowing, pay down public debts, increase public services (I should specify: public services which are worth the government keeping people on payroll to perform as a public service). Taxes aren’t an equalizer, they’re a government revenue stream. They’re not always even the best government revenue stream to cover every service, some can be fee-for-service, some can be covered by tariffs.
  - jncfhnb 2y ago
    Ok. Reduce borrowing. Done. The rich benefit disproportionately from societal structures. The bulk of market driven capital gains should be collected for the benefit of society. Equalizing need not come into the dialogue.
    - SllX 2y ago
      Sure—and as of 2018, I’m a little out of the loop on anything more recent, the top 1% in the US paid about 40% of US taxes—but have you considered also reducing borrowing, spending and services and then adjusting tax rates across the board down once we’ve gotten our debts down to a more manageable level?
Sohcahtoa82 2y ago
We have both. The federal deficit has been skyrocketing every since Reagan massively cut the top marginal rate. Combine it with crony capitalism, where government contracts go to whoever promises to kick back the most to the politicians' next campaign, "use it or lose it" budgeting that encourages wasteful spending, and we have massive over-spending. You must recognize that it's a very bad look when a state says "We're going to let poor children starve and cut $X from school lunch programs" and then in the same breath say "We're cutting taxes on 'job creators' by $X".
- qeternity 2y ago
  Nobody is starving in the US. This is ridiculous.
  - Sohcahtoa82 2y ago
    Over 21,000 people died in the USA from malnutrition in 2022. Many suffer from food insecurity. https://www.cnn.com/2023/12/21/health/nutritional-deficiency-life-expectancy/index.html https://www.cnn.com/2023/12/21/health/nutritional-deficiency...

082349872349872 2y ago

The jurisdictions I'm aware of that have actually implemented these taxes impose per-mille, not percent.

tracker1 2y ago

This kind of assumes liquidity... A lot of wealth is tied up in stocks and physical assets. Imagine having to orchestrate selling 2% of everything you own every year. And why over a billion, why not put it at over a million, or ten? You could seize the full assets of every US Billionaire and it wouldn't cover a single year of the federal budget or dent the debt. There's no way to tax out of this hole... spending cuts need to happen, and restructuring as well. Taxes should focus on points of exchange.

thmsths 2y ago
There is a very good counter argument to the liquidity issue: property taxes. Most Americans have a large portion, if not all of their net worth tied up in their house. This is a very illiquid asset. Yet we have no problem taxing them at around 2%. If regular people can do it, I am sure billionaires will figure out a way to pay too.
- tracker1 2y ago
  I don't believe that property taxes are a good thing either. In 3 years, my own property taxes alone have increased my mortgage payment by close to 30%. I think we'd be better off with exchange taxes. Every time assets, securities, currency, etc is exchanged... it gets taxed. This includes stock trades. Property taxes are a way to make people not actually own their property.
  - ryandrake 2y ago
    How on earth do property taxes increase one's mortgage payment? They don't increase the size of your loan, so should have no effect on either your interest or principal payments. You might have chosen to pay your property taxes monthly, through escrow, and thus 1/12 of your property tax is sent along with your mortgage principal and interest every month, but your actual mortgage numbers aren't changing.
    - tracker1 2y ago
      Exactly.. because it's taken monthly into escrow. The fact is, I'm paying close to 30% more than a few years ago and it's entirely because of property taxes. Nobody should have property removed simply for living another year. edit: property taxes are actually up about 400% over when I bought my home 6 years ago. They property evaluation is now close to market value, where it was much lower/less and historically had been. It's been a money grab. It's also been particularly hard on retired home owners.

fred_is_fred 2y ago

I had no idea there were so many billionaires on HN - billionaires who cannot possibly for any reason think of a way to pay taxes because as it is explained in comments here, it is simply not possible, and if it was possible they shouldn't pay because federal spending.

slater 2y ago
We're all just temporarily embarrassed millionaires.
nullc 2y ago
Well no one else is fred_is_fred, so we should all be okay with taxing fred_is_fred specifically at 100%? Billionaires already pay for an extraordinary outsized portion of federal spending, so I don't think that deceptive framing does anything except turn people against your position.

Ekaros 2y ago

My personal first step in increasing income from capital gains is to tax any stock-buyback at 50%... If company has money to buyback stock it might as well be heavily taxed... This would direct cash to dividends which then could get taxed as individual gains...

downrightmike 2y ago
95%, or just make it illegal again, like they did in response to the Great Depression.
- pfannkuchen 2y ago
  Are stock buybacks really purely a tax dodge? At a high level, if a company which has taken investment in the past in return for giving up some control of the company, if they have spare cash later it seems reasonable to buy back some of that control. If available control of the company is then more scarce but the demand hasn’t changed, it’s fair that the share price goes up as a result. People on the internet seem to treat it as a loophole that is being exploited, but I don’t really see that. Should companies never be allowed to roll back share issuance?
  - wmf 2y ago
    A company cannot control itself and shares that are bought back are canceled so it doesn't really change the ownership. The effects of dividends and buybacks are the same but they are taxed differently.
    - pfannkuchen 2y ago
      It doesn’t really change the ownership? It undilutes the remaining shares. That’s why they are worth more. If undilution doesn’t really change the ownership, then logically dilution doesn’t really change the ownership either. That is straightforwardly false, therefore your statement is false. I understand the Reddit tier surface level analysis and I am questioning that, while you are just parroting it again back at me.