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While I'm a fierce proponent of wealth taxes, efforts like this one will hurt finances of the EU and the middle class more. Only focusing on the EU means the re
by jcfrei 2y ago
While I'm a fierce proponent of wealth taxes, efforts like this one will hurt finances of the EU and the middle class more. Only focusing on the EU means the really rich will just move their assets abroad to avoid taxes. Efforts like these need to be enacted on an OECD level and first focus on the $100M+ crowd at a low tax rate. Keeping expectations for massive social impacts low and making sure all loopholes and issues are closed before moving to broader wealth taxes - otherwise the populists will claim failure after a few years (populists backed by rich donors) and call for abandonment of wealth taxes - so they get some peace for the next 50 years.
Equally important we also need to be clever how to implement this tax collection. The ideal setup is a form of sovereign wealth fund, where individuals that need to pay the tax can loan out shares of their company. The issue for lots of very rich people is that they are not liquid enough to fund these taxes. The solution is to allow tax collection by giving these individuals the opportunity to deposit shares of their company as collateral at a wealth fund - giving the fund access to dividend payouts (those need to be tax free) that then cover the required taxation. That way owners of family businesses can keep ownership of their companies and still pay wealth taxes.
- maxrecursion 2y agoThat's a good idea for how the ultra rich can pay taxes without forcing them to liquidate stock, and at least addresses the core of the problem. But if the stock "shared" with the tax collector paid enough in dividends to cover the taxes, couldn't they just pay the taxes with the dividends to begin with? How does sharing the stock help? Wouldn't the tax collector need to liquidate the stock to get any actually value from it?
- lhpz 2y agoA stock retains value even without producing dividends. Allowing wealth tax payments in the form of stock, rather than cash, addresses the liquidity issue, especially for large family-owned companies. The challenge lies in accurately valuing the stock for private companies, but that's where finance experts come in ! Furthermore, an agreement between the taxpayer and the wealth fund could accompany the transaction, including terms like holding the stock for a specified number of years, buyback preferences, or limited voting rights. At a discount on the stock price. Given the financial and legal complexities, as well as the challenges in standardizing the process, this would only apply to payments of a highly substantial amount. But one could argue that these individuals are no longer equal to others in terms of their tax obligations, as they have some ability to negotiate to a certain extent. That's probably the main problem. Just thinking out loud !