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Thanks I'll take a look. I'm broadly aware of some of this and have read Piketty but not any of these German sources. My concern is that if middle/upper incom

Thanks I'll take a look. I'm broadly aware of some of this and have read Piketty but not any of these German sources. My concern is that if middle/upper income groups believe that a wealth tax will reduce asset prices through forced selling by the ultra wealthy, and they think that affects assets in their pensions/home/savings then they will not vote for it and therefore it won't happen. I'm looking for something which tackles this concern head on.

tfourb 2y ago
Your worries are correct. Taxes on wealth (instead of on income) usually fail because the ultra-rich successfully convince the middle class that their assets (mainly their house) will fall in value. I'm not an economist. But from my point of view and based on what I've read about this the argument is relatively straightforward: - Yes, if you tax the assets of the ultra-rich, the prices of those asset classes will tend to fall. - That is the whole point of the exercise (in addition to maybe raising government revenues). You tax real estate held be the ultra-rich, because you want real estate to be affordable by normal people. But yes, it is likely that also the house or apartment of a "normal" home owner will decrease in value. - This decrease will not be drastic or sudden, though. It might also simply come in the form of less value appreciation over time. If (like in the U.S.) the top 10% hold 50% of the real estate (presumably measured in value, not square footage) and increased taxes would lead to those ultra-rich to divest of half of that over the span of a few years, the effect on individual home owners would probably be negligible in practically all cases. - You can minimize or outright eliminate downside risk for "normal" people with regulation: limits on foreclosures, direct subsidies for middle-class homeowners, etc. - At the same time, if you succeed in lowering real estate prices, the upside is clear: For poor and middle class people, both renting and acquiring real estate becomes more affordable. If this policy pushes you above the wealth threshold required for home ownership, it makes a strong contribution to building intergenerational wealth. And if you remain a renter, it makes moving (and thus maximizing your income potential) much more accessible, because you are not bound to your existing lease (which is much cheaper than having to sign a new rental agreement).

tfourb 2y ago

Your worries are correct. Taxes on wealth (instead of on income) usually fail because the ultra-rich successfully convince the middle class that their assets (mainly their house) will fall in value. I'm not an economist. But from my point of view and based on what I've read about this the argument is relatively straightforward: - Yes, if you tax the assets of the ultra-rich, the prices of those asset classes will tend to fall. - That is the whole point of the exercise (in addition to maybe raising government revenues). You tax real estate held be the ultra-rich, because you want real estate to be affordable by normal people. But yes, it is likely that also the house or apartment of a "normal" home owner will decrease in value. - This decrease will not be drastic or sudden, though. It might also simply come in the form of less value appreciation over time. If (like in the U.S.) the top 10% hold 50% of the real estate (presumably measured in value, not square footage) and increased taxes would lead to those ultra-rich to divest of half of that over the span of a few years, the effect on individual home owners would probably be negligible in practically all cases. - You can minimize or outright eliminate downside risk for "normal" people with regulation: limits on foreclosures, direct subsidies for middle-class homeowners, etc. - At the same time, if you succeed in lowering real estate prices, the upside is clear: For poor and middle class people, both renting and acquiring real estate becomes more affordable. If this policy pushes you above the wealth threshold required for home ownership, it makes a strong contribution to building intergenerational wealth. And if you remain a renter, it makes moving (and thus maximizing your income potential) much more accessible, because you are not bound to your existing lease (which is much cheaper than having to sign a new rental agreement).