5 ms·

Rep Ro Khanna faces Silicon Valley backlash after embracing wealth tax

30 points by nodesocket 9mo ago

nodesocket 9mo ago
The wealth tax might be one of the most idiotic ideas to come out of California in a while. The wealthy are already leaving California and this will be the final nail in the coffin. I left San Francisco in 2018 for Tennessee and so glad I did. I wouldn’t have been able to buy a house, accrue real savings, and run a small business nearly as successfully from CA. Most certainly I’d still be renting a studio apartment the size of a closet with no washer, dryer, and dishwasher. The All-In Podcast hosts have already said they are looking at moving out of CA if this passes. If you’re wealthy you’d be fiscally irresponsible to stay. Wealthy will flee leaving a socialist state which only supports those who depend of the state. We all know that works out. Democrats vilifying the wealthy, while strategically might be effective is frankly un-American and is breeding a population of pessimistic, disillusioned, radical socialists.
- sharts 9mo ago
  Let them leave and let their fans leave. Fewer people means lower prices. CA is beyond capacity
  - mlindner 9mo ago
    CA is not beyond capacity in any way other than the fact that capacity has been artificially limited.
- sedawkgrep 9mo ago
  Elizabeth Warren, who has been a champion of financial reforms - specifically to assist in helping the middle and lower classes - is a proponent of wealth taxes. That means a lot more to me than your grumpy, politically charged anecdote.
  - nodesocket 9mo ago
    I'm not sure using Elizabeth Warren as a measuring stick of sound political policy is sane.
    - sedawkgrep 9mo ago
      shrug Well, between you and her, I'll take the senator, former Harvard Law professor, and architect of the CFPB.
  - potato3732842 9mo ago
    That's not the endorsement you think it is. Quite the opposite really. Warren was "cool" 10+yr ago when she was a fairly niche issue academic on the fringes of federal politics. Obama should have made her head of the CFPB as that was here whole thing. Instead she sold her soul to the DNC and became a useless unremarkable senator who just spews whatever party line drivel the consultants say the median voter is receptive to that day. This would be excusable if she was just another crap politician but based on her prior work she's clearly capable of better.
    - m-hodges 9mo ago
      It’s always funny when people reveal that they don’t know what the DNC is or does.
      - potato3732842 9mo ago
        >It’s always funny when people reveal that they don’t know what the DNC is or does. I question if you know what they do. They are the ones who establish the official baseline platform for the party. Calling them out specifically vs just the party is basically like calling out a local board vs the entire municipal government.
        deleted 9mo ago
        [deleted]
- strathmeyer 9mo ago
  [dead]
- catlover76 9mo ago
  [dead]
- lapcat 9mo ago
  I'm confused by your argument. The proposed wealth tax is on billionaires. That's fewer than 200 people in California. You're obviously not one of them, and never were one of them, so it wouldn't raise your taxes. And it sounds like you left San Francisco not because of taxes but because of the cost of housing. San Francisco used to be a city where normal people could afford to live. The current insane price of housing was caused primarily by the growth of the tech industry. It's true that the tech industry in California created a vast amount of wealth, but that wealth is concentrated into relatively few hands, especially the billionaires. The wealth did not trickle down to normal people; what did trickle down was housing inflation and gentrification. If the tech industry left Silicon Valley—and there's no inherent reason why it needs to be concentrated in Silicon Valley, given the technology to work from anywhere—perhaps San Francisco would be better off in general and return to normalcy.
  - mothballed 9mo ago
    Most billionaires are billionaires are on paper, by owning capital. Capital used to produce things. I'm presuming they won't actually be taxing capital investment but if they did you simply end up driving much of those capital investments elsewhere. If they are simply taxing whatever loose cash and personal (mostly luxury) assets people have, then yeah I don't expect it will shake things up very quickly, paying an extra ~5% to live in San Francisco isn't the biggest deal if it stops there.
    - deleted 9mo ago
      [deleted]
    - lapcat 9mo ago
      > Most billionaires are billionaires are on paper, by owning capital. By owning stock. I'm not sure that "on paper" is a particularly interesting qualifier. I'm not a billionaire, but most of my wealth, such as it is, is "on paper". I have some cash on hand to pay expenses (technically, a checking account, and less than $50 in physical bills and coins), but you're probably losing money if you're keeping most of it in cash and not investing it on something with returns. > Capital used to produce things. The reality is much more complicated than this simple statement. An IPO is a one-time cash infusion for the company; subsequent sales of the shares on the stock market may bring additional cash to the shareholders, but not to the company. A company may issue additional shares, but this requires approval of the current shareholders, who probably won't look kindly on dilution. I think the main use of this is not to raise additional capital from the public but rather to compensate employees. (Sometimes companies do the opposite: stock buybacks, where the company gives cash to stockholders rather than vice versa.) One primary purpose of an IPO is not to raise new capital but rather to compensate the company founders/executives and initial private investors. So you could say that stock indirectly produces things by enticing investment. But a lucrative IPO requires that the company already produce something of value before the IPO. A successful publicly owned corporation does not require further capital infusion from investors, because sales of the corporation's products to customers are more than sufficient to fund continued operation. > you simply end up driving much of those capital investments elsewhere It's questionable how much these investments actually benefit the community. For example, if labor is brought primarily from outside the community, then existing residents do not necessarily benefit from the spending, and they may find themselves priced out of their own community by the incoming labor force. > If they are simply taxing whatever loose cash and personal (mostly luxury) assets people have No, that does not appear to be the design or intention of the proposed wealth tax.
- terminatornet 9mo ago
  Can I have some money since you're a billionaire?
- tomwheeler 9mo ago
  While I certainly understand the appeal of tax arbitrage, California has at least one thing going for it. Unlike most states, it generally disallows non-compete clauses as a matter of public policy. Tech thrives on the mobility of talent, so it's no coincidence that California is where the tech industry thrives. Almost 70 years ago, eight engineers at Shockley Semiconductor had a better idea and left to start Fairchild Semiconductor. That led to Intel, AMD, and National Semiconductor, later spawning NVIDIA, SGI, Qualcomm, and ultimately creating trillions of dollars in wealth. No other state will ever overtake California's dominance here unless it allows for that same mobility of talent. Almost every state tries to _attract_ billionaires these days, but this is one reason why most states can't _create_ them.
  - mothballed 9mo ago
    California has a lot going for it. Great geography, lots of university, great talent, talent with many different backgrounds, momentum from industry. Non compete non-enforcement also exist in places like North Dakota (which has nearly as a high a GDP/cap), but they can't offer a lot of these other things. In many ways California is just being capitalist like the "actual" capitalist and taxing whatever the market will bear. It will probably bear a lot in California. There's no need for them to dress it up as a social project, it's just the ruthless gears of the state run by people with personalities nearly identical to the CEOs that would also do the same thing in their shoes. The poor will continue to suffer the ~same fate and the friends of politicians will continue to be enriched. The middle class sees maybe the ever tiniest budge from one or two billionaires pulling out along with whatever jobs their capital provides, but otherwise their lives basically move on as usual and they can preach about their support for the poor using someone else's dime at almost no risk to themselves.
- JumpCrisscross 9mo ago
  > wealthy are already leaving California Source? (I live in Wyoming. Every time I’ve looked up stats for the East Coast, the millionaire exodus has turned out a myth.)
  - collingreen 9mo ago
    Don't let facts get in the way of good ol fashioned propaganda!
- collingreen 9mo ago
  Lol oh my! I'll let all my neighbors know they are pessimistic, disillusioned, radical, socialists! And to think we were just talking about how amazing the weather is right now and how grateful we are to live at the beach! Boy were we wrong!
ppeetteerr 9mo ago
A one-time wealth tax doesn't seem to make a ton of sense. The current loop hole is that loans are not taxed so people take out loans against their assets thus never paying income tax. Tax those loans and refund taxes when the loans are repaid.
- deleted 9mo ago
  [deleted]
- JumpCrisscross 9mo ago
  > current loop hole is that loans are not taxed The loophole is the stepped-up basis. Loans are fine since they have to be repaid one way or another. Loans that defer taxation until the liability extinguishes itself are the problem.
  - mindslight 9mo ago
    The way I understand it, the point of stepped-up basis was to avoid double taxation with estate tax. The problem is that estate tax has been mostly de facto eliminated. Also I'd argue that the loophole is the not having to treat the loan as a concrete valuation/liquidity event, as the goal of most tax regulations is to prevent people delaying paying tax (with things like IRAs being exceptions).
    - master_crab 9mo ago
      Of all the victims, people should have the least sympathy on taxation (double or otherwise) on the estate. The US (federal - states have different limits) already sets the minimum threshold for estate tax collection at about $14 million. At that level, we dont, and should not care about double, triple, or n-level taxation on the estate (which is what it sounds like you are implying).
      - mindslight 9mo ago
        I described how I believe the current state came about. You should have been able to tell the directionality of my comment from what else I chose to mention. Yet you still found it appropriate to pile on with some equity-eschewing rallying cry. Given that what you're saying is the direct opposite of the situation we've actually arrived at, do you think that maximally-presented changes will have any hope at succeeding? But really, you should learn that this kind of inflammatory policing of the ingroup is very toxic, and only alienates people from your overall goal.
JumpCrisscross 9mo ago
I'm a proponent of adding tax brackets. We currently have 7 brackets capping out at $609,351 (37%) [1]. I say we add brackets at $2mm (39%), $10mm (41%), $100mm (43%) and $1bn (45%). Then take away the stepped-up basis past 10x the median American's wealth (about $6mm [2]). If you do it right, you could actually (increase) the thresholds on the lower brackets, thereby bringing the median voter's taxes down. [1] https://www.irs.gov/filing/federal-income-tax-rates-and-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac... [2] https://finance.yahoo.com/news/average-american-net-worth-620-121500111.html https://finance.yahoo.com/news/average-american-net-worth-62...
childintime 9mo ago
When are the tech giants taxed properly, world-wide? They are free loaders now. Soon continents, like Europe, are to expected to create their own solutions. The USA is becoming a liability.
keernan 9mo ago
I don't care how its accomplished, but there must be a system that assures that everyone shares the same relative burden of paying for the costs of society. Relative burden meaning the financial pain Musk experiences is the same as you and I experience. Right now, income is the only thing taxed by the federal government. Unlike wage earners, the truly wealthy ( say over 100 million in assets ) only have income if and when they chose to do so. Every billionaire could chose to never pay a single penny of income tax - and remain a billionaire - forever. And that's exactly what they do. They do not pay income tax. Unless they have an asset readjustment reason to do so.

30 points by nodesocket 9mo ago

The wealth tax might be one of the most idiotic ideas to come out of California in a while. The wealthy are already leaving California and this will be the final nail in the coffin. I left San Francisco in 2018 for Tennessee and so glad I did. I wouldn’t have been able to buy a house, accrue real savings, and run a small business nearly as successfully from CA. Most certainly I’d still be renting a studio apartment the size of a closet with no washer, dryer, and dishwasher. The All-In Podcast hosts have already said they are looking at moving out of CA if this passes. If you’re wealthy you’d be fiscally irresponsible to stay. Wealthy will flee leaving a socialist state which only supports those who depend of the state. We all know that works out. Democrats vilifying the wealthy, while strategically might be effective is frankly un-American and is breeding a population of pessimistic, disillusioned, radical socialists.

sharts 9mo ago
Let them leave and let their fans leave. Fewer people means lower prices. CA is beyond capacity
- mlindner 9mo ago
  CA is not beyond capacity in any way other than the fact that capacity has been artificially limited.
sedawkgrep 9mo ago
Elizabeth Warren, who has been a champion of financial reforms - specifically to assist in helping the middle and lower classes - is a proponent of wealth taxes. That means a lot more to me than your grumpy, politically charged anecdote.
- nodesocket 9mo ago
  I'm not sure using Elizabeth Warren as a measuring stick of sound political policy is sane.
  - sedawkgrep 9mo ago
    shrug Well, between you and her, I'll take the senator, former Harvard Law professor, and architect of the CFPB.
- potato3732842 9mo ago
  That's not the endorsement you think it is. Quite the opposite really. Warren was "cool" 10+yr ago when she was a fairly niche issue academic on the fringes of federal politics. Obama should have made her head of the CFPB as that was here whole thing. Instead she sold her soul to the DNC and became a useless unremarkable senator who just spews whatever party line drivel the consultants say the median voter is receptive to that day. This would be excusable if she was just another crap politician but based on her prior work she's clearly capable of better.
  - m-hodges 9mo ago
    It’s always funny when people reveal that they don’t know what the DNC is or does.
    - potato3732842 9mo ago
      >It’s always funny when people reveal that they don’t know what the DNC is or does. I question if you know what they do. They are the ones who establish the official baseline platform for the party. Calling them out specifically vs just the party is basically like calling out a local board vs the entire municipal government.
      - deleted 9mo ago
        [deleted]
strathmeyer 9mo ago
[dead]
catlover76 9mo ago
[dead]
lapcat 9mo ago
I'm confused by your argument. The proposed wealth tax is on billionaires. That's fewer than 200 people in California. You're obviously not one of them, and never were one of them, so it wouldn't raise your taxes. And it sounds like you left San Francisco not because of taxes but because of the cost of housing. San Francisco used to be a city where normal people could afford to live. The current insane price of housing was caused primarily by the growth of the tech industry. It's true that the tech industry in California created a vast amount of wealth, but that wealth is concentrated into relatively few hands, especially the billionaires. The wealth did not trickle down to normal people; what did trickle down was housing inflation and gentrification. If the tech industry left Silicon Valley—and there's no inherent reason why it needs to be concentrated in Silicon Valley, given the technology to work from anywhere—perhaps San Francisco would be better off in general and return to normalcy.
- mothballed 9mo ago
  Most billionaires are billionaires are on paper, by owning capital. Capital used to produce things. I'm presuming they won't actually be taxing capital investment but if they did you simply end up driving much of those capital investments elsewhere. If they are simply taxing whatever loose cash and personal (mostly luxury) assets people have, then yeah I don't expect it will shake things up very quickly, paying an extra ~5% to live in San Francisco isn't the biggest deal if it stops there.
  - deleted 9mo ago
    [deleted]
  - lapcat 9mo ago
    > Most billionaires are billionaires are on paper, by owning capital. By owning stock. I'm not sure that "on paper" is a particularly interesting qualifier. I'm not a billionaire, but most of my wealth, such as it is, is "on paper". I have some cash on hand to pay expenses (technically, a checking account, and less than $50 in physical bills and coins), but you're probably losing money if you're keeping most of it in cash and not investing it on something with returns. > Capital used to produce things. The reality is much more complicated than this simple statement. An IPO is a one-time cash infusion for the company; subsequent sales of the shares on the stock market may bring additional cash to the shareholders, but not to the company. A company may issue additional shares, but this requires approval of the current shareholders, who probably won't look kindly on dilution. I think the main use of this is not to raise additional capital from the public but rather to compensate employees. (Sometimes companies do the opposite: stock buybacks, where the company gives cash to stockholders rather than vice versa.) One primary purpose of an IPO is not to raise new capital but rather to compensate the company founders/executives and initial private investors. So you could say that stock indirectly produces things by enticing investment. But a lucrative IPO requires that the company already produce something of value before the IPO. A successful publicly owned corporation does not require further capital infusion from investors, because sales of the corporation's products to customers are more than sufficient to fund continued operation. > you simply end up driving much of those capital investments elsewhere It's questionable how much these investments actually benefit the community. For example, if labor is brought primarily from outside the community, then existing residents do not necessarily benefit from the spending, and they may find themselves priced out of their own community by the incoming labor force. > If they are simply taxing whatever loose cash and personal (mostly luxury) assets people have No, that does not appear to be the design or intention of the proposed wealth tax.
terminatornet 9mo ago
Can I have some money since you're a billionaire?
tomwheeler 9mo ago
While I certainly understand the appeal of tax arbitrage, California has at least one thing going for it. Unlike most states, it generally disallows non-compete clauses as a matter of public policy. Tech thrives on the mobility of talent, so it's no coincidence that California is where the tech industry thrives. Almost 70 years ago, eight engineers at Shockley Semiconductor had a better idea and left to start Fairchild Semiconductor. That led to Intel, AMD, and National Semiconductor, later spawning NVIDIA, SGI, Qualcomm, and ultimately creating trillions of dollars in wealth. No other state will ever overtake California's dominance here unless it allows for that same mobility of talent. Almost every state tries to _attract_ billionaires these days, but this is one reason why most states can't _create_ them.
- mothballed 9mo ago
  California has a lot going for it. Great geography, lots of university, great talent, talent with many different backgrounds, momentum from industry. Non compete non-enforcement also exist in places like North Dakota (which has nearly as a high a GDP/cap), but they can't offer a lot of these other things. In many ways California is just being capitalist like the "actual" capitalist and taxing whatever the market will bear. It will probably bear a lot in California. There's no need for them to dress it up as a social project, it's just the ruthless gears of the state run by people with personalities nearly identical to the CEOs that would also do the same thing in their shoes. The poor will continue to suffer the ~same fate and the friends of politicians will continue to be enriched. The middle class sees maybe the ever tiniest budge from one or two billionaires pulling out along with whatever jobs their capital provides, but otherwise their lives basically move on as usual and they can preach about their support for the poor using someone else's dime at almost no risk to themselves.
JumpCrisscross 9mo ago
> wealthy are already leaving California Source? (I live in Wyoming. Every time I’ve looked up stats for the East Coast, the millionaire exodus has turned out a myth.)
- collingreen 9mo ago
  Don't let facts get in the way of good ol fashioned propaganda!
collingreen 9mo ago
Lol oh my! I'll let all my neighbors know they are pessimistic, disillusioned, radical, socialists! And to think we were just talking about how amazing the weather is right now and how grateful we are to live at the beach! Boy were we wrong!

ppeetteerr 9mo ago

A one-time wealth tax doesn't seem to make a ton of sense. The current loop hole is that loans are not taxed so people take out loans against their assets thus never paying income tax. Tax those loans and refund taxes when the loans are repaid.

deleted 9mo ago
[deleted]
JumpCrisscross 9mo ago
> current loop hole is that loans are not taxed The loophole is the stepped-up basis. Loans are fine since they have to be repaid one way or another. Loans that defer taxation until the liability extinguishes itself are the problem.
- mindslight 9mo ago
  The way I understand it, the point of stepped-up basis was to avoid double taxation with estate tax. The problem is that estate tax has been mostly de facto eliminated. Also I'd argue that the loophole is the not having to treat the loan as a concrete valuation/liquidity event, as the goal of most tax regulations is to prevent people delaying paying tax (with things like IRAs being exceptions).
  - master_crab 9mo ago
    Of all the victims, people should have the least sympathy on taxation (double or otherwise) on the estate. The US (federal - states have different limits) already sets the minimum threshold for estate tax collection at about $14 million. At that level, we dont, and should not care about double, triple, or n-level taxation on the estate (which is what it sounds like you are implying).
    - mindslight 9mo ago
      I described how I believe the current state came about. You should have been able to tell the directionality of my comment from what else I chose to mention. Yet you still found it appropriate to pile on with some equity-eschewing rallying cry. Given that what you're saying is the direct opposite of the situation we've actually arrived at, do you think that maximally-presented changes will have any hope at succeeding? But really, you should learn that this kind of inflammatory policing of the ingroup is very toxic, and only alienates people from your overall goal.

JumpCrisscross 9mo ago

I'm a proponent of adding tax brackets. We currently have 7 brackets capping out at $609,351 (37%) [1]. I say we add brackets at $2mm (39%), $10mm (41%), $100mm (43%) and $1bn (45%). Then take away the stepped-up basis past 10x the median American's wealth (about $6mm [2]). If you do it right, you could actually (increase) the thresholds on the lower brackets, thereby bringing the median voter's taxes down. [1] https://www.irs.gov/filing/federal-income-tax-rates-and-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac... [2] https://finance.yahoo.com/news/average-american-net-worth-620-121500111.html https://finance.yahoo.com/news/average-american-net-worth-62...

childintime 9mo ago

When are the tech giants taxed properly, world-wide? They are free loaders now. Soon continents, like Europe, are to expected to create their own solutions. The USA is becoming a liability.

keernan 9mo ago

I don't care how its accomplished, but there must be a system that assures that everyone shares the same relative burden of paying for the costs of society. Relative burden meaning the financial pain Musk experiences is the same as you and I experience. Right now, income is the only thing taxed by the federal government. Unlike wage earners, the truly wealthy ( say over 100 million in assets ) only have income if and when they chose to do so. Every billionaire could chose to never pay a single penny of income tax - and remain a billionaire - forever. And that's exactly what they do. They do not pay income tax. Unless they have an asset readjustment reason to do so.