Modeling a Wealth Tax • Hacker News Board

Re: Modeling a Wealth Tax

#31

Post by jp555 » Tue, Aug 18, 2020, 1:40 PM UTC

paulhart wrote: post #9

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.

60% of Amazon stock is owned by mutual funds & other institutional investors (like pension funds).

77% of Google is owned by mutual funds & other institutional investors.

62% of Apple is owned my mutual funds & other institutional investors.

79% of Facebook is owned by mutual funds & other institutional investors.

Re: Modeling a Wealth Tax

#32

Post by sroussey » Tue, Aug 18, 2020, 1:40 PM UTC

bengotow wrote: post #12

Wow, this ignores both the "floor" below which you would not be subject to the wealth tax (in the US, most recently by Elizabeth Warren, this has been discussed as $50M+), and ALSO fails to take into account that you would be growing your principal at ~3-8% a year through investment, etc. Sure, I guess with no floor on the tax and with your money just literally sitting in a pile, the government would eventually take…

Real estate has such taxes, no floor.

Re: Modeling a Wealth Tax

#33

Post by barretts » Tue, Aug 18, 2020, 1:40 PM UTC

For a guy who's always railing about the value of honest, rational discourse, he's unbelievably misleading and political in this post. He ignores asset growth and the fact that all the wealth tax proposals have a very high floor for the tax.

Saying the government will take 45% of your wealth above $100M is very different than saying the government will take 45% of your wealth.

Re: Modeling a Wealth Tax

#34

Post by bhupy » Tue, Aug 18, 2020, 1:41 PM UTC

LatteLazy wrote: post #23

What we need is inheritance tax. If you've made money, you can keep it. But you can't live for free just because some guy 100 years ago made money and you won the genetic lottery.

12 states have an inheritance/estate tax. Definitely worth replicating in the others, too.

Re: Modeling a Wealth Tax

#35

Post by thoughtstheseus » Tue, Aug 18, 2020, 1:41 PM UTC

PaulHoule wrote: post #22

Note the "25% of the stock" is not too different from a typical person who might easily pay 25% of their income in income tax, sales, VAT taxes. A more fundamental problem w/ wealth tax is administration. How do you tax unrealized capital gains?

If you set the bar very high, say $100 million. It’s usually doable to monetize assets (get cash out without selling). At low levels it’s unworkable

Re: Modeling a Wealth Tax

#36

Post by logicchains » Tue, Aug 18, 2020, 1:41 PM UTC

toomuchtodo wrote: post #21

iNate2000 wrote: post #14

Earlier quoted context omitted.

It’s not about how many founders actually gain the wealth; it’s about how the perceived reward motivates innovation. Or, rather, how the lack of reward fails to motivate.

> Or, rather, how the lack of reward fails to motivate. One example that comes to mind is the entire open source community, the provides enormous amounts of productivity with little to no compensation, would rebut this argument. Another example would be Watsi, a YC startup, with enormous impact but no profit motive (there are many top notch YC non profits, I pick this one because it is my favorite). Taxes are higher…

>Taxes are higher in most of the developed world. People still start businesses, people still go to work.

They still start businesses, but they start far fewer per capita: compare for instance the number of new Fortune 500 entrants over the past couple decades from the US vs from Europe.

Re: Modeling a Wealth Tax

#37

Post by bitcurious » Tue, Aug 18, 2020, 1:41 PM UTC

tnr23 wrote: post #15

A problem that is usually not noticed with a wealth tax is that you have to pay the wealth tax from money which already has been taxed with some sort of income tax. 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 t…

>tax combined with a 50% income tax

Properly managed capital gains are taxed at ~15% or less. One should hope that by the time you accrue $50 million your capital gains are properly managed.

Re: Modeling a Wealth Tax

#38

Post by jmvoodoo » Tue, Aug 18, 2020, 1:41 PM UTC

dccoolgai wrote: post #19

Lavery wrote: post #5

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.

And there's also a "ceiling" above which the super-wealthy manage to hire lawyers, accountants, etc. to make the rate effectively "0".

This. What all of these taxes accomplish is preventing people from becoming wealthy. In this way it benefits the people that are already wealthy by making it that much harder to climb the wealth ladder. Many of the tax increases on the "rich" really just tax the upper middle class and do nothing to tax people that are actually wealthy.

If you want to tax the wealthy, then simplify the tax code and remove loopholes and deductions. Leave rates alone.

Re: Modeling a Wealth Tax

#39

Post by ampron » Tue, Aug 18, 2020, 1:42 PM UTC

logicchains wrote: post #20

paulhart wrote: post #9

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.

>If you have a bucket of money that isn't doing anything, then what value does it actually bring to the economy 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.

“Riskier”, but how much riskier? Having to beat inflation by 1% is not that much riskier compared to the gained equality in taxation. Bad argument. You can’t leave off the amount and implicitly use the worst case scenario to argue against all cases.

Re: Modeling a Wealth Tax

#40

Post by Applejinx » Tue, Aug 18, 2020, 1:42 PM UTC

Yeah, if you don't work or even invest and do nothing for your whole entire life, while sitting on a pile of cash larger than you could ever use (and note: we specify you are NOT USING IT) you could end up dying (in a presumably stable society that hasn't itself killed you) sitting on a pile of cash only half larger than you could ever use (and we specify that you are NOT USING IT).

So persuasive. Gee, I'm really convinced. Certainly worth destroying societies over and risking violent revolution and the destruction of all those assets.