6 ms·

Wait are you suggesting that we tax assets instead of income?

andrepd 1y ago
It's not a revolutionary idea. That I know of, the Netherlands does it, somewhat. How it works is: rather than taxing capital gains, with its myriad loopholes and counterloopholes, you tax assets directly: assume a neutral sort of "risk-free" rate of return, and then tax a percentage of that. E.g. assume yearly return of 1% on cash and savings, 6% on other assets, etc, then levy tax of 30% on that (past a tax-free allowance of 25k€ per person). Simple, and more effective!
- shivasaxena 1y ago
  I would consider it very destabilizing idea and an affront to fairness really. As an example, Wouldn't that mean that if my startup raises a round of 1m for 10%, my NW would go to 0 to 9m. 6% of that would be around 0.5m, and 30% tax would mean I would have to pay 162,000 EUR in taxes. As a cash poor founder how do you suggest I pay that. That's why taxing income and not wealth has been the norm.
  - balderdash 1y ago
    Not to mention no one would pay you $9m for your stake and for you to walk away…
  - polyomino 1y ago
    I think you missed the part that this was in Europe, no need to worry about startups
  - andrepd 1y ago
    Have you considered taking a measly 20 seconds out of your day—surely a fraction of the time you took to type this comment—to google this information? Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Jesus --- To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Simply put: your retirement savings, your brokerage account = assets, your startup, your company, your farm = income.
    - shivasaxena 1y ago
      > To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Enlightening, so you mean this policy isn't for the so called "1%"? Only for middle class folks and their stock portfolios? That's not what the GP was proposing. > Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Yes, because I can point to an even richer country, with even more valuable companies where the left proposed same destructive policy only a few months ago and almost came close to winning. Lastly, you did make me look it up and it seems Netherlands and other European countries really didn't think it through. https://www.leideninternationalcentre.nl/get-advice/blogs/supreme-court-overturns-wealth-tax-bill-implications-for-expats https://www.leideninternationalcentre.nl/get-advice/blogs/su... https://www.linkedin.com/posts/jasoncalacanis_norways-wealth-tax-and-the-founder-exodus-activity-7267550807858810880-9FDO/ https://www.linkedin.com/posts/jasoncalacanis_norways-wealth...
      - anton-c 1y ago
        > the wealth tax was based on assumed returns rather than actual returns That does sound poorly thought thru. Why not just calculate it instead of "assumed returns"? Seems unfair on its face and bound to go wrong.
      - andrepd 1y ago
        > so you mean this policy isn't for the so called "1%"? Only for middle class folks and their stock portfolios? What do you mean? This is a proportional tax (slightly progressive actually due to the 0% rate on the first bracket). It's for everyone with such assets. > where the left proposed same destructive policy only a few months ago and almost came close to winning. If you think either of the major parties in the USA can be in any way described as "left" then this is not a serious conversation.
- ml-anon 1y ago
  Americans become idiots when it comes to tax, unable to understand even the simplest concepts or fathom that things might have been possibly implemented elsewhere. Hell even Switzerland taxes global assets. You just declare your stocks, property, etc at some instantaneous value and that’s that. Capital gains aren’t taxed. The system is easy to cheat and until recently it was possible for HNW people to get a bespoke deal when moving there. But the tax rate is low enough and the risk is high enough that it’s more beneficial to just pay.
mattmanser 1y ago
There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. It's a loophole the mega-rich are using to avoid tax. The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. And one of the big things they've got? No capital gains on those stocks when passed to children. So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
- shivasaxena 1y ago
  Not just rich people. Here in estonia small startups like mine pay minimum tax, and reinvest the rest in company. > There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. They have a stockholding in a firm, and the firm pays CIT on income earned. That sounds fair. > The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. Why should my kids be liable to pay a tax when they inherit my house? That house was bought by my income on which PIT was duty fully paid. Again sounds very fair to me. > And one of the big things they've got? No capital gains on those stocks when passed to children. Again sounds fair to me.
  - barrkel 1y ago
    The heart of this is what you think tax is. If you just think it's the government stealing your stuff, then it seems very unfair to have your stuff taxed after you die. But what tax is, under another lens, is a way to divert the capacity of a state to social ends. Everything from the military to the police to prisons and the justice system is what enables you to live in peace and accumulate stuff in the first place. Those are social goods. So how do you fund this spending? How do you incentivize other people to protect your house? Well, the solution of tax is they take a little bit of your stuff over time, in a predictable way, according to rules that are pre-agreed and can be changed with consensus.

It's not a revolutionary idea. That I know of, the Netherlands does it, somewhat. How it works is: rather than taxing capital gains, with its myriad loopholes and counterloopholes, you tax assets directly: assume a neutral sort of "risk-free" rate of return, and then tax a percentage of that. E.g. assume yearly return of 1% on cash and savings, 6% on other assets, etc, then levy tax of 30% on that (past a tax-free allowance of 25k€ per person). Simple, and more effective!

shivasaxena 1y ago
I would consider it very destabilizing idea and an affront to fairness really. As an example, Wouldn't that mean that if my startup raises a round of 1m for 10%, my NW would go to 0 to 9m. 6% of that would be around 0.5m, and 30% tax would mean I would have to pay 162,000 EUR in taxes. As a cash poor founder how do you suggest I pay that. That's why taxing income and not wealth has been the norm.
- balderdash 1y ago
  Not to mention no one would pay you $9m for your stake and for you to walk away…
- polyomino 1y ago
  I think you missed the part that this was in Europe, no need to worry about startups
- andrepd 1y ago
  Have you considered taking a measly 20 seconds out of your day—surely a fraction of the time you took to type this comment—to google this information? Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Jesus --- To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Simply put: your retirement savings, your brokerage account = assets, your startup, your company, your farm = income.
  - shivasaxena 1y ago
    > To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Enlightening, so you mean this policy isn't for the so called "1%"? Only for middle class folks and their stock portfolios? That's not what the GP was proposing. > Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Yes, because I can point to an even richer country, with even more valuable companies where the left proposed same destructive policy only a few months ago and almost came close to winning. Lastly, you did make me look it up and it seems Netherlands and other European countries really didn't think it through. https://www.leideninternationalcentre.nl/get-advice/blogs/supreme-court-overturns-wealth-tax-bill-implications-for-expats https://www.leideninternationalcentre.nl/get-advice/blogs/su... https://www.linkedin.com/posts/jasoncalacanis_norways-wealth-tax-and-the-founder-exodus-activity-7267550807858810880-9FDO/ https://www.linkedin.com/posts/jasoncalacanis_norways-wealth...
    - anton-c 1y ago
      > the wealth tax was based on assumed returns rather than actual returns That does sound poorly thought thru. Why not just calculate it instead of "assumed returns"? Seems unfair on its face and bound to go wrong.
    - andrepd 1y ago
      > so you mean this policy isn't for the so called "1%"? Only for middle class folks and their stock portfolios? What do you mean? This is a proportional tax (slightly progressive actually due to the 0% rate on the first bracket). It's for everyone with such assets. > where the left proposed same destructive policy only a few months ago and almost came close to winning. If you think either of the major parties in the USA can be in any way described as "left" then this is not a serious conversation.
ml-anon 1y ago
Americans become idiots when it comes to tax, unable to understand even the simplest concepts or fathom that things might have been possibly implemented elsewhere. Hell even Switzerland taxes global assets. You just declare your stocks, property, etc at some instantaneous value and that’s that. Capital gains aren’t taxed. The system is easy to cheat and until recently it was possible for HNW people to get a bespoke deal when moving there. But the tax rate is low enough and the risk is high enough that it’s more beneficial to just pay.

mattmanser 1y ago

There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. It's a loophole the mega-rich are using to avoid tax. The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. And one of the big things they've got? No capital gains on those stocks when passed to children. So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.

shivasaxena 1y ago
Not just rich people. Here in estonia small startups like mine pay minimum tax, and reinvest the rest in company. > There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. They have a stockholding in a firm, and the firm pays CIT on income earned. That sounds fair. > The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. Why should my kids be liable to pay a tax when they inherit my house? That house was bought by my income on which PIT was duty fully paid. Again sounds very fair to me. > And one of the big things they've got? No capital gains on those stocks when passed to children. Again sounds fair to me.
- barrkel 1y ago
  The heart of this is what you think tax is. If you just think it's the government stealing your stuff, then it seems very unfair to have your stuff taxed after you die. But what tax is, under another lens, is a way to divert the capacity of a state to social ends. Everything from the military to the police to prisons and the justice system is what enables you to live in peace and accumulate stuff in the first place. Those are social goods. So how do you fund this spending? How do you incentivize other people to protect your house? Well, the solution of tax is they take a little bit of your stuff over time, in a predictable way, according to rules that are pre-agreed and can be changed with consensus.