4 ms·

That would destroy the incentive to save. Why put aside a dollar now, only to have it taxed every year? Better to spend it while it’s whole. That changes fut

That would destroy the incentive to save. Why put aside a dollar now, only to have it taxed every year? Better to spend it while it’s whole. That changes future value calculations, too. These are things not to mess with lightly.

triceratops 4mo ago
> That would destroy the incentive to save. Why put aside a dollar now, only to have it taxed every year? Ok? If you choose to spend a dollar instead of saving it, that implies some business will get that dollar. That implies someone will still invest in, build, and run businesses. > These are things not to mess with lightly. I agree. It requires a lot of thinking, discussion, deliberation and all that. But the basic math doesn't lie. We will have fewer workers in the future. Machines will make more and more stuff. If you want to continue supporting retirees as promised, then taxing the machines is the only answer. Otherwise you'll have to break some promises to retirees and pensioners; now that's a real disincentive to save.
thrance 4mo ago
> Better to spend it while it’s whole. Yes, that's the whole point. That's a good thing. Money is meant to be spent, not be hoarded and slept on forever. Money velocity is terrible right now, capital generates more income than wages, this is neither healthy nor sustainable, and certainly isn't fair to the ones actually doing the productive work. In the ideal society there'd be no Epstein or Thiel, everyone would have a rewarding and productive economic activity.
red-iron-pine 4mo ago
we have property taxes, and its taxed every year. and somehow people keep trying to buy yet more property. plenty of incentive to put money there, ditto for saving. a saved dollar does not stimulate the economy, either. the whole idea of microloans is that the money gets spent ASAP and goes straight into the economy
danny_codes 4mo ago
Depends on implementation. For example, a wealth tax that has a "cap" at some ludicrous amount of wealth, like $10M, would effect very few people and therefore be insignificant for the average worker. So 99% of people would continue saving with no change at all to their behavior. The externalities could be nice though, since it'd distribute capital more efficiently. Sort of a general stimulant to the economy.
- WarmWash 4mo ago
  This line of thinking though assumes it would have no impact on the largest players though. It hinges on a "calling their bluff", that high NW individuals won't change anything despite now being forced to annually liquidate assets to cover taxes. And this doesn't even touch on the immense impracticality of annually valuing assets. Or how to manage assets in illiquid markets, or how to sell 30% of a painting to cover 1% of it's mark-to-market value by year end. The reason wealth taxes never go anywhere is because when you sit down and learn what wealth is, how it works, and what is practical, it makes the most sense by far to just tax things whenever they go back to cash. Really the only genuine tax loop-hole is the step-up basis on inheritance. Everything else is just an elaborate deferral to pay taxes later.
  - vladms 4mo ago
    While I agree with "it's more complex than it seems", some simple things are not done because of FUD and politicians. There are countries (ex: https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Box_3:_savings_and_investment https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo...) that do tax wealth assets (maybe not all, and maybe not perfectly) and they seem to be doing just fine.
  - triceratops 4mo ago
    > despite now being forced to annually liquidate assets to cover taxes Allow paying the tax with assets. Put the assets into a black box sovereign wealth fund that's controlled by some mechanical algorithm which sells things at random as needed to fund the government budget. At scale this will be indistinguishable from a whole-economy index fund. The best part about this is rich people can't beg off by saying "I have to liquidate stuff". How do you pay with assets for real estate or boats or paintings? An IOU that can be cashed in when the asset is sold. Oh the boat is owned by an LLC so it never changes hands? No problem, the government has a share in the LLC too. (IANAL, IANAA so working out the loopholes is left as an exercise for the reader). A second benefit is startup shares don't have to get hit with a capital gains tax before the startup goes public. Right now people sometimes pay taxes on shares that are eventually worth zero. Instead if this tax could be paid in startup shares, then there's no unfair tax bill. As a condition of paying in assets, forbid the government from exercising any control over the assets. No shareholder voting, no board seats, not even choosing the paint color on the boat. Additionally, this tax can't be on top of income tax. The whole point is to fix the worker-funded tax pyramid scheme. It has to be revenue-neutral with respect to income tax.

triceratops 4mo ago

> That would destroy the incentive to save. Why put aside a dollar now, only to have it taxed every year? Ok? If you choose to spend a dollar instead of saving it, that implies some business will get that dollar. That implies someone will still invest in, build, and run businesses. > These are things not to mess with lightly. I agree. It requires a lot of thinking, discussion, deliberation and all that. But the basic math doesn't lie. We will have fewer workers in the future. Machines will make more and more stuff. If you want to continue supporting retirees as promised, then taxing the machines is the only answer. Otherwise you'll have to break some promises to retirees and pensioners; now that's a real disincentive to save.

thrance 4mo ago

> Better to spend it while it’s whole. Yes, that's the whole point. That's a good thing. Money is meant to be spent, not be hoarded and slept on forever. Money velocity is terrible right now, capital generates more income than wages, this is neither healthy nor sustainable, and certainly isn't fair to the ones actually doing the productive work. In the ideal society there'd be no Epstein or Thiel, everyone would have a rewarding and productive economic activity.

red-iron-pine 4mo ago

we have property taxes, and its taxed every year. and somehow people keep trying to buy yet more property. plenty of incentive to put money there, ditto for saving. a saved dollar does not stimulate the economy, either. the whole idea of microloans is that the money gets spent ASAP and goes straight into the economy

danny_codes 4mo ago

Depends on implementation. For example, a wealth tax that has a "cap" at some ludicrous amount of wealth, like $10M, would effect very few people and therefore be insignificant for the average worker. So 99% of people would continue saving with no change at all to their behavior. The externalities could be nice though, since it'd distribute capital more efficiently. Sort of a general stimulant to the economy.

WarmWash 4mo ago
This line of thinking though assumes it would have no impact on the largest players though. It hinges on a "calling their bluff", that high NW individuals won't change anything despite now being forced to annually liquidate assets to cover taxes. And this doesn't even touch on the immense impracticality of annually valuing assets. Or how to manage assets in illiquid markets, or how to sell 30% of a painting to cover 1% of it's mark-to-market value by year end. The reason wealth taxes never go anywhere is because when you sit down and learn what wealth is, how it works, and what is practical, it makes the most sense by far to just tax things whenever they go back to cash. Really the only genuine tax loop-hole is the step-up basis on inheritance. Everything else is just an elaborate deferral to pay taxes later.
- vladms 4mo ago
  While I agree with "it's more complex than it seems", some simple things are not done because of FUD and politicians. There are countries (ex: https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Box_3:_savings_and_investment https://en.wikipedia.org/wiki/Taxation_in_the_Netherlands#Bo...) that do tax wealth assets (maybe not all, and maybe not perfectly) and they seem to be doing just fine.
- triceratops 4mo ago
  > despite now being forced to annually liquidate assets to cover taxes Allow paying the tax with assets. Put the assets into a black box sovereign wealth fund that's controlled by some mechanical algorithm which sells things at random as needed to fund the government budget. At scale this will be indistinguishable from a whole-economy index fund. The best part about this is rich people can't beg off by saying "I have to liquidate stuff". How do you pay with assets for real estate or boats or paintings? An IOU that can be cashed in when the asset is sold. Oh the boat is owned by an LLC so it never changes hands? No problem, the government has a share in the LLC too. (IANAL, IANAA so working out the loopholes is left as an exercise for the reader). A second benefit is startup shares don't have to get hit with a capital gains tax before the startup goes public. Right now people sometimes pay taxes on shares that are eventually worth zero. Instead if this tax could be paid in startup shares, then there's no unfair tax bill. As a condition of paying in assets, forbid the government from exercising any control over the assets. No shareholder voting, no board seats, not even choosing the paint color on the boat. Additionally, this tax can't be on top of income tax. The whole point is to fix the worker-funded tax pyramid scheme. It has to be revenue-neutral with respect to income tax.