4 ms·

I guess my complaint was more about the type of taxes rather than the concept of taxes in general. Income tax I can accept: it's the price of entry to live in t

by jbstack 10mo ago

I guess my complaint was more about the type of taxes rather than the concept of taxes in general. Income tax I can accept: it's the price of entry to live in the place and enjoy its benefits. Even then there's plenty of room for debate between the extremes of "ultra-low / no tax" and "very high", but let's set that aside for now. But having a wealth tax with a very low threshold is something else entirely. It means that I'm not free to invest and grow the money that is already mine, that I already paid taxes on in the first place. It means I'll always be held back and prevented from advancing as much as I could. It means that improving your situation so that next year you're doing a little better than this year, is something that the system actively pushes you away from. There are also practical problems with taxing wealth. Income tax is "easy": by definition you have the money to pay for it because it's charged on money that you've received. With a wealth tax, you might not have the money. For example, if you own an investment apartment or some other illiquid asset you can't just sell a piece of it every year to pay the tax. You'll either have to find the money out of income (assuming you have enough) or ruin your investment strategy by selling the whole thing when you didn't plan to. It also distorts the risk/reward tradeoff: many investments might not make sense at all if you're suddenly paying 2% a year of the value.

ponector 10mo ago
2% is comparable to the property tax in USA.
ethbr1 10mo ago
> There are also practical problems with taxing wealth. [...] With a wealth tax, you might not have the money. For example, if you own an investment apartment or some other illiquid asset you can't just sell a piece of it every year to pay the tax. This is a strawman trotted out against wealth taxes. Stated another way: no, people shouldn't be able to put their wealth into an arbitrary form to make it untaxable. After that, it's standard planning. Owe an unexpected amount of tax on a high performing asset you don't want to liquidate? Take a loan with it/gains as collateral. (The same as people do now!) The bigger issue is valuation of illiquid assets. I.e. how to properly tax someone benefiting from opaque trusts or with shares of non-public assets (which they might be inclined to hide the profitability of).
- jbstack 10mo ago
  "Take a loan with it" - that's not a practical solution if the asset is property. Getting a mortgage approved is far from straightforward, can take months, is by no means guaranteed to be accepted, and can be extremely expensive if done frequently (e.g. yearly) due to one-off costs and lock-in periods.
  - ethbr1 10mo ago
    I'm not sure what country you live in, but in the US at least, mortgages (and their property-collateral loan relatives) are incredibly easy to get, relatively cheap, and come in a (perhaps overly so) incredible range of flavors.
jermaustin1 10mo ago
If my math is correct, and it almost certainly isn't, if you had 100kEUR in savings, you would be taxed on "fictitious" returns on 42k. The fictitious rate of return they use is 1.44%, which brings your fictitious returns to 600EUR. You then owe income taxes on that return, which is 200EUR. So your wealth tax on 100k is 0.2% or so... Again, my math might have missed a zero somewhere.

by jbstack 10mo ago

ponector 10mo ago

2% is comparable to the property tax in USA.

ethbr1 10mo ago

> There are also practical problems with taxing wealth. [...] With a wealth tax, you might not have the money. For example, if you own an investment apartment or some other illiquid asset you can't just sell a piece of it every year to pay the tax. This is a strawman trotted out against wealth taxes. Stated another way: no, people shouldn't be able to put their wealth into an arbitrary form to make it untaxable. After that, it's standard planning. Owe an unexpected amount of tax on a high performing asset you don't want to liquidate? Take a loan with it/gains as collateral. (The same as people do now!) The bigger issue is valuation of illiquid assets. I.e. how to properly tax someone benefiting from opaque trusts or with shares of non-public assets (which they might be inclined to hide the profitability of).

jbstack 10mo ago
"Take a loan with it" - that's not a practical solution if the asset is property. Getting a mortgage approved is far from straightforward, can take months, is by no means guaranteed to be accepted, and can be extremely expensive if done frequently (e.g. yearly) due to one-off costs and lock-in periods.
- ethbr1 10mo ago
  I'm not sure what country you live in, but in the US at least, mortgages (and their property-collateral loan relatives) are incredibly easy to get, relatively cheap, and come in a (perhaps overly so) incredible range of flavors.

jermaustin1 10mo ago

If my math is correct, and it almost certainly isn't, if you had 100kEUR in savings, you would be taxed on "fictitious" returns on 42k. The fictitious rate of return they use is 1.44%, which brings your fictitious returns to 600EUR. You then owe income taxes on that return, which is 200EUR. So your wealth tax on 100k is 0.2% or so... Again, my math might have missed a zero somewhere.