11–20 of 1001 posts
Equity returns are on average 6% above inflation, so with a wealth tax of below 6% your wealth can still grow year on year indefinitely. EDIT: Source: https://www.frbsf.org/economic-research/files/wp2017-25.pdf . The precise number is real returns of 6.89% on equity, 7.05% on housing
Sure, I guess with no floor on the tax and with your money just literally sitting in a pile, the government would eventually take a lot of it.
It's not fair that someone who earns 100k with no assets pays as much tax as someone who earns 100k but also inherited a 1mn house and has a whole load of cash reserves from not paying rent/mortgages for years. It's doubly not fair when the wealthier individual can divert most of their salary into a pension and not pay tax on it, because they can afford to do it now.
Someone's wealth should not be eroded by tax, but their earning power should be adjusted based on marginal dollar value.
What percentage of founders experience a liquidity event netting them enough to be impacted by a wealth tax (90% of startups fail [1])? This is arguing against taxing a lottery ticket, while not addressing the issue of existing wealth inequality. “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” ― Ronald Wright EDIT: @Ap…
Or, rather, how the lack of reward fails to motivate.
Means a 2% wealth tax combined with a 50% income tax, dividend tax, capital gains tax or whatever ends up being a 4% wealth tax effectively.
Example: You own stock worth $1,000,000 and the government wants 2% wealth tax from you which means $20,000. But to get that $20,000 you have to sell $40,000 worth of stock and pay 50% income tax for that sale and the government ends up taking 40,000$ effectively.
Equity returns are on average 6% above inflation, so with a wealth tax of below 6% your wealth can still grow year on year indefinitely. EDIT: Source: https://www.frbsf.org/economic-research/files/wp2017-25.pdf . The precise number is real returns of 6.89% on equity, 7.05% on housing
And if you think that's a bad idea, why should individuals do it in order to stay above the wealth tax?
Equity returns are on average 6% above inflation, so with a wealth tax of below 6% your wealth can still grow year on year indefinitely. EDIT: Source: https://www.frbsf.org/economic-research/files/wp2017-25.pdf . The precise number is real returns of 6.89% on equity, 7.05% on housing
This ignores the fact that everywhere (including countries where wealth taxes are implemented today), there is a floor below which the tax does not kick in.
Someone forgot to model growth in the value of the asset, and/or putting the wealth to use. A wealth tax is, to an approximation, the equivalent of the "management fee" that an ETF charges, but with the revenues going to the government. If you have a bucket of money that isn't doing anything, then what value does it actually bring to the economy? Penalizing static value seems almost reasonable.
Wealthy people don't just leave their money under a mattress, they invest it in something. Even if they just left it in a bank, the bank is still going to lend that money out and invest it. Taxing wealth just encourages riskier investments, as higher risk is needed to achieve comparable post-tax return.