4 ms·

How to Tax the Rich: Piketty

23 points by worik 2y ago

babelfish 2y ago
Surprisingly weak article from such a strong economist. TLDR - "a one time tax of 10% or 20%" and "expat taxes". Agree with all of his points but wish that this was a more substantial policy recommendation.
- n_ary 2y ago
  It is not really possible to tax the rich. If someone is in top 5% or higher in the society, they have numerous wealth to afford various loopholes for tax avoidance. Everytime I see a discussion of taxing the rich, we have some weird pseudo tax raise for poor and middle-class instead by defining the rich as some super minimum wage and putting the maximum squeen on anyone above poverty to lower middle class.
- alejohausner 2y ago
  I agree. Picketty is too tame. If those billionaires' wealth has risen from $200 billion to $1.2 trillion from 2010 to 2024, that implies an annual growth rate of 13%. Hence a YEARLY wealth tax of 10% would still leave room for growth.
- slowmovintarget 2y ago
  > ...such a strong economist. "Strong" economists don't need to fudge their data. The only real move to tax the wealthy is to end trusts... everywhere. Everything else spills over onto the middle class, and those who aren't mobile enough to get out of the way. But the middle class doesn't use trusts. You can try to regulate loans against securities, but you're right back to putting "regular folk" in the cross-hairs. This talk of taxing potential gains would create a mechanism through which governments could absolutely ruin ordinary individuals while never touching the purported targets.
Epa095 2y ago
The strongest argument against against wealth tax, at least for smaller countries, is that it also targets the most mobile (and quite frankly, whiny) people. It's just easier to increase taxes on the middle class a few points than introduce a wealth tax. But I dream of a world where the US and EU agree to both introduce a wealth tax. Unfortunately I think the democracies of the world will rather crumble under unsustainable wealth disparancy than do something like that:-/
vessenes 2y ago
Piketty waves his hands at a major open question on any wealth tax proposal: it’s one thing to seize ‘hard’ assets like say gold. Equity assets are very different animals. The wealth increases he refers to here are largely calculated by marking public market stock prices to a recent trading price. That wealth is not real: it is in potentia and predicated at least in part on the markets beliefs about who will be selling and how much. Seizing or accepting tax payments by forcing a sale of a large amount of stock is going to generate huge losses as stock prices adjust : I don’t understand how you can see this as anything but at best wealth transfer. The wealth being transferred is out of billionaire pockets, and also out of every single shareholders pockets , including pension funds, retirees: .. “Meh” he says, just sell it to existing employees. At what price? It’s just extremely lazy thinking from a very intelligent man.
- Epa095 2y ago
  He sais that it should be possible to pay the tax with the stocks themselves.
  - vessenes 2y ago
    Yes but then what? If the government wants revenues it will sell them. It’s a hand wave not a solution at best or a disingenuous pitch to nationalize any business that becomes too valuable; if so it’s a very radical recontextualization - in the west we generally do not think the government should be a shareholder of private enterprise long term because this impacts the benefits of market competition, among many other things. Our legal and tax system is not set up for a government with direct investment and ownership arms.
    - Epa095 2y ago
      Governments can own stocks just fine, just look at sovereign wealth funds around the world. But a more 'automatic' solution where the government sells off the stocks amortized over the year is also fine, and gives more predictability for the stock market. And who will buy? Other billionaires yes, but they will pay the state, so the end result is moving of wealth from the billionaires to the state. And regarding your 'state ownership' tabu, Scandinavia says hi;-) But that's a different discussion, for this tax I am fine with the state continuously selling it.
snapplebobapple 2y ago
My concern with this is it is based on a number of wrong ideas: it is wrong that all billionaires are bad. Billionaires with exceptional skill are great and i want them to have as much money as possible because they will create value with it at a higher rate than any government program and most of that benefit will eventually be competed out of prices into value to consumera ( first gen billionaires who made their fortunes founding multiple successful companies would be one obviously good billionaire type but there are others). It is wrong that government will sustainably do any better for society than any billionaire. Governments have a corruption amd waste lifecycle and many are very corrupt and wasteful right now. It is wrong to give those governments any money. They need to be starved and reformed or destroyed and remade. it is also wrong that taking more than a couple percent wealth tax would do nothing. It would likely prtially crsh the value of that wealth because it is mostly in stock and that stock would need to ve sold to pay the tax. Further it is wrong that it solves sonething because the big problem is not the billionaire, it is the increasing market power abuse used to make some of the billionaires. It would be better to break up their market power abusing companies and cause a wealth decrease that way because that miti_ates the market power distorting the market.
- Epa095 2y ago
  The argument is not that the billionaires are bad people, but that the amasment of wealth is bad. It's bad because it concentrates power, causes social unrest, and because the money can be better spent other places. The rest of your argument is that governments are bad and that money spent there is always better spent by a billionaire. Idk what kind of dysfunctional society made you think this, and I definitely agree that there are such dysfunctional societies out there, but for functioning ones this is clearly wrong. Government invests in stuff like national defence, law system, education and health care. These are clearly beneficial and highly profitable things, they are in fact the stage on which the billionaires build their wealth. And if the billionaires don't help pay for it, the middle class must.
  - snapplebobapple 2y ago
    The argument that amassing wealth is bad is fundamentally untrue, as it depends on the skill of the person amassing the wealth (I gave an example of one type of billionaire that probably wasn't bad, it's also an example of one type of wealth amassing that isn't bad). Concentrating power is good if the concentrating is happening in people that will push the production possibilities frontier out quickly. Amassing wealth through market power abuse is bad (looking at you Bezos and your company amazon since atleast 2005, with various nefarious business practices that are obvious market power abuse rather than innovation as the example of this). So so wealth amassing is good, some is bad, the feature of bad wealth amassing is market power abuse, so my criticism is we shouldn't hate on the wealth concentration, we should hate on the method of wealth concentration that cause deadweight loss and we have ample laws to do that via antitrust, we just aren't using them effectively since roughly the 1970s (thanks Rhenquist supreme court). I never said money is always better spent by billionaires, I made the distinction I reiterated and expanded on above and said government has a lifecycle so where in the lifecycle a government is determines how likely it is to spend money better than a billionaire (or better than any individual for that matter), but again that comparison is individual because there are differences among individuals and governments and the devil is in the details. I have the most experience with the USA and Canada and I would say both of those are corrupt and wasteful enough to give serious pause to any desire to send them any additional money but they are both still productive enough that the inefficiency and waste isn't necessarily obvious to everyone yet (it's probably coming, wait a decade or two and if you don't see a mass downsizing of the federal labor force or other large reduction in spending with a smaller reduction in services to stave off the obviousness it will likely be obvious to all by then.) Certainly they do those things, how they do those things determines whether the government is efficient or wasteful. Whether they are beneficial or highly profitable is up for debate because none of the words you mentioned are actual things, they are amalgamations of good and bad things and the ratio matters a lot. I'm a fan of progressive income taxes as I like paying more if I get more benefit and I certainly benefit from effectively provided healthcare, roads, education because my workforce gets more productive and my customers get richer and more able to buy stuff. This isn't the issue here, the issue here is understanding how likely more money to government will benefit society or benefit politicians and harm society and understanding that most of the problem with billionaires isn't a billionaire problem, it's an antitrust problem, for which we have a legislated solution that we need to grow up and start using again (break up the large company exercising market power causing deadweight loss, regulate business practice to outlaw stupid anticompetitive crap like most of what makes up a seller contract with amazon these days). The concern is also that piketty fundamentally misunderstands the effect of a wealth tax on capital markets. they will be forced to sell stock/companies to pay it and that will crush the financial market. Of the group of billionaires that are actually doing a good job pushing the production possibilities frontier out, it is also actively harmful because it diminishes their control of their companies and harms company financing capability. The system shock of somthing like a 10 or 20% wealth tax will cause a lot of deadweight loss that Piketty does not appreciate while doing nothing more than funneling money into questionable governments. If one is going to disrupt the financial market like that one should at least be doing it mitigating market power by, for example, breaking up the obvious oligopolies that infest our business environment.
grakker 2y ago
It absolutely blows my mind that anyone would defend Billionaires and their hoards. It's like reading a bunch of college freshman, honestly thinking libertarianism is legit while worshipping at the tainted alter of St. Reagan and his objectively discredited, BS trickle-down supply-side crap. That said, this article is pretty flimsy on any realistic way to deal with disgusting levels of wealth accumulation and inequality.
dave333 2y ago
Governments should become minority partners of billionaires. Billionaires could be required to create a holding stock of their assets. Taxes would be paid either as a wealth fraction say 1%/year and/or as a gain in networth year over year maybe 20%. Taxes would be paid as shares in the billionaires holdings that government can use as needed by selling on the open market or leave as an investment in the billionaire that would fund future spending. Idea is to keep the billionaires in control of the (unspent) assets. Government over time might become largely funded by this means greatly reducing the need for middle class taxation.
worik 2y ago
I am interested that the idea of consumption tax is not more widely touted Consumption taxes are paid by the very wealthy, and are very difficult to avoid They are regressive, but that can be fixed by universal citizens' dividends. Take from the rich and give to everybody

23 points by worik 2y ago

Surprisingly weak article from such a strong economist. TLDR - "a one time tax of 10% or 20%" and "expat taxes". Agree with all of his points but wish that this was a more substantial policy recommendation.

n_ary 2y ago
It is not really possible to tax the rich. If someone is in top 5% or higher in the society, they have numerous wealth to afford various loopholes for tax avoidance. Everytime I see a discussion of taxing the rich, we have some weird pseudo tax raise for poor and middle-class instead by defining the rich as some super minimum wage and putting the maximum squeen on anyone above poverty to lower middle class.
alejohausner 2y ago
I agree. Picketty is too tame. If those billionaires' wealth has risen from $200 billion to $1.2 trillion from 2010 to 2024, that implies an annual growth rate of 13%. Hence a YEARLY wealth tax of 10% would still leave room for growth.
slowmovintarget 2y ago
> ...such a strong economist. "Strong" economists don't need to fudge their data. The only real move to tax the wealthy is to end trusts... everywhere. Everything else spills over onto the middle class, and those who aren't mobile enough to get out of the way. But the middle class doesn't use trusts. You can try to regulate loans against securities, but you're right back to putting "regular folk" in the cross-hairs. This talk of taxing potential gains would create a mechanism through which governments could absolutely ruin ordinary individuals while never touching the purported targets.

Epa095 2y ago

The strongest argument against against wealth tax, at least for smaller countries, is that it also targets the most mobile (and quite frankly, whiny) people. It's just easier to increase taxes on the middle class a few points than introduce a wealth tax. But I dream of a world where the US and EU agree to both introduce a wealth tax. Unfortunately I think the democracies of the world will rather crumble under unsustainable wealth disparancy than do something like that:-/

vessenes 2y ago

Piketty waves his hands at a major open question on any wealth tax proposal: it’s one thing to seize ‘hard’ assets like say gold. Equity assets are very different animals. The wealth increases he refers to here are largely calculated by marking public market stock prices to a recent trading price. That wealth is not real: it is in potentia and predicated at least in part on the markets beliefs about who will be selling and how much. Seizing or accepting tax payments by forcing a sale of a large amount of stock is going to generate huge losses as stock prices adjust : I don’t understand how you can see this as anything but at best wealth transfer. The wealth being transferred is out of billionaire pockets, and also out of every single shareholders pockets , including pension funds, retirees: .. “Meh” he says, just sell it to existing employees. At what price? It’s just extremely lazy thinking from a very intelligent man.

Epa095 2y ago
He sais that it should be possible to pay the tax with the stocks themselves.
- vessenes 2y ago
  Yes but then what? If the government wants revenues it will sell them. It’s a hand wave not a solution at best or a disingenuous pitch to nationalize any business that becomes too valuable; if so it’s a very radical recontextualization - in the west we generally do not think the government should be a shareholder of private enterprise long term because this impacts the benefits of market competition, among many other things. Our legal and tax system is not set up for a government with direct investment and ownership arms.
  - Epa095 2y ago
    Governments can own stocks just fine, just look at sovereign wealth funds around the world. But a more 'automatic' solution where the government sells off the stocks amortized over the year is also fine, and gives more predictability for the stock market. And who will buy? Other billionaires yes, but they will pay the state, so the end result is moving of wealth from the billionaires to the state. And regarding your 'state ownership' tabu, Scandinavia says hi;-) But that's a different discussion, for this tax I am fine with the state continuously selling it.

snapplebobapple 2y ago

My concern with this is it is based on a number of wrong ideas: it is wrong that all billionaires are bad. Billionaires with exceptional skill are great and i want them to have as much money as possible because they will create value with it at a higher rate than any government program and most of that benefit will eventually be competed out of prices into value to consumera ( first gen billionaires who made their fortunes founding multiple successful companies would be one obviously good billionaire type but there are others). It is wrong that government will sustainably do any better for society than any billionaire. Governments have a corruption amd waste lifecycle and many are very corrupt and wasteful right now. It is wrong to give those governments any money. They need to be starved and reformed or destroyed and remade. it is also wrong that taking more than a couple percent wealth tax would do nothing. It would likely prtially crsh the value of that wealth because it is mostly in stock and that stock would need to ve sold to pay the tax. Further it is wrong that it solves sonething because the big problem is not the billionaire, it is the increasing market power abuse used to make some of the billionaires. It would be better to break up their market power abusing companies and cause a wealth decrease that way because that miti_ates the market power distorting the market.

Epa095 2y ago
The argument is not that the billionaires are bad people, but that the amasment of wealth is bad. It's bad because it concentrates power, causes social unrest, and because the money can be better spent other places. The rest of your argument is that governments are bad and that money spent there is always better spent by a billionaire. Idk what kind of dysfunctional society made you think this, and I definitely agree that there are such dysfunctional societies out there, but for functioning ones this is clearly wrong. Government invests in stuff like national defence, law system, education and health care. These are clearly beneficial and highly profitable things, they are in fact the stage on which the billionaires build their wealth. And if the billionaires don't help pay for it, the middle class must.
- snapplebobapple 2y ago
  The argument that amassing wealth is bad is fundamentally untrue, as it depends on the skill of the person amassing the wealth (I gave an example of one type of billionaire that probably wasn't bad, it's also an example of one type of wealth amassing that isn't bad). Concentrating power is good if the concentrating is happening in people that will push the production possibilities frontier out quickly. Amassing wealth through market power abuse is bad (looking at you Bezos and your company amazon since atleast 2005, with various nefarious business practices that are obvious market power abuse rather than innovation as the example of this). So so wealth amassing is good, some is bad, the feature of bad wealth amassing is market power abuse, so my criticism is we shouldn't hate on the wealth concentration, we should hate on the method of wealth concentration that cause deadweight loss and we have ample laws to do that via antitrust, we just aren't using them effectively since roughly the 1970s (thanks Rhenquist supreme court). I never said money is always better spent by billionaires, I made the distinction I reiterated and expanded on above and said government has a lifecycle so where in the lifecycle a government is determines how likely it is to spend money better than a billionaire (or better than any individual for that matter), but again that comparison is individual because there are differences among individuals and governments and the devil is in the details. I have the most experience with the USA and Canada and I would say both of those are corrupt and wasteful enough to give serious pause to any desire to send them any additional money but they are both still productive enough that the inefficiency and waste isn't necessarily obvious to everyone yet (it's probably coming, wait a decade or two and if you don't see a mass downsizing of the federal labor force or other large reduction in spending with a smaller reduction in services to stave off the obviousness it will likely be obvious to all by then.) Certainly they do those things, how they do those things determines whether the government is efficient or wasteful. Whether they are beneficial or highly profitable is up for debate because none of the words you mentioned are actual things, they are amalgamations of good and bad things and the ratio matters a lot. I'm a fan of progressive income taxes as I like paying more if I get more benefit and I certainly benefit from effectively provided healthcare, roads, education because my workforce gets more productive and my customers get richer and more able to buy stuff. This isn't the issue here, the issue here is understanding how likely more money to government will benefit society or benefit politicians and harm society and understanding that most of the problem with billionaires isn't a billionaire problem, it's an antitrust problem, for which we have a legislated solution that we need to grow up and start using again (break up the large company exercising market power causing deadweight loss, regulate business practice to outlaw stupid anticompetitive crap like most of what makes up a seller contract with amazon these days). The concern is also that piketty fundamentally misunderstands the effect of a wealth tax on capital markets. they will be forced to sell stock/companies to pay it and that will crush the financial market. Of the group of billionaires that are actually doing a good job pushing the production possibilities frontier out, it is also actively harmful because it diminishes their control of their companies and harms company financing capability. The system shock of somthing like a 10 or 20% wealth tax will cause a lot of deadweight loss that Piketty does not appreciate while doing nothing more than funneling money into questionable governments. If one is going to disrupt the financial market like that one should at least be doing it mitigating market power by, for example, breaking up the obvious oligopolies that infest our business environment.

grakker 2y ago

It absolutely blows my mind that anyone would defend Billionaires and their hoards. It's like reading a bunch of college freshman, honestly thinking libertarianism is legit while worshipping at the tainted alter of St. Reagan and his objectively discredited, BS trickle-down supply-side crap. That said, this article is pretty flimsy on any realistic way to deal with disgusting levels of wealth accumulation and inequality.

dave333 2y ago

Governments should become minority partners of billionaires. Billionaires could be required to create a holding stock of their assets. Taxes would be paid either as a wealth fraction say 1%/year and/or as a gain in networth year over year maybe 20%. Taxes would be paid as shares in the billionaires holdings that government can use as needed by selling on the open market or leave as an investment in the billionaire that would fund future spending. Idea is to keep the billionaires in control of the (unspent) assets. Government over time might become largely funded by this means greatly reducing the need for middle class taxation.

worik 2y ago

I am interested that the idea of consumption tax is not more widely touted Consumption taxes are paid by the very wealthy, and are very difficult to avoid They are regressive, but that can be fixed by universal citizens' dividends. Take from the rich and give to everybody