Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Modeling a Wealth Tax

paulgraham.com

Post reply on HN
Print view View original

121–130 of 1001 posts

Re: Modeling a Wealth Tax

#121

Post by calyth2018 »

thomasdullien wrote: post #93

Perhaps notable: Switzerland has a wealth tax (of up to 0.3%), and there is zero evidence that this has any deterrent effect on wealthy people settling in Switzerland or startups being created in Switzerland. Other features of the tax system more than offset the 0.3% wealth tax. Personally, I am a bit disappointed by the lack of depth of the discourse: Wealth taxes and their effect have been studied quite a bit in ec…

"the Silicon Valley crowd is strangely avoidant of examining evidence or explaining their opposition with real-world data. It's all 101ism and polemics."

It's not strange at all. It's self-interest.

Re: Modeling a Wealth Tax

#122

Post by marcinzm »

bitcurious wrote: post #26

I'm highly skeptical of the claim that such tax would discourage startup founders. Wealth tax proposals I've seen don't kick in until $50 million or $100 million. This means that there is a floor on how "poor" the government can make you via a wealth tax. This has two implications: 1. Most "successful" startup founders don't break that threshold of personal wealth. 2. For most startup founders, the startup is the onl…

> I'm highly skeptical of the claim that such tax would discourage startup founders.

It'd discourage the people who pay the bills (VCs, wealthy, etc.) from living in those states. Founders would simply follow the money to other states as they have done in the past.

Re: Modeling a Wealth Tax

#123

Post by epistasis »

bhupy wrote: post #99
epistasis wrote: post #95

Earlier quoted context omitted.

Wealth hoarding matters immensely for things like land, which is why the most common wealth tax is a tax on real estate holdings. It can also matter for other resources which are finite, but land is one of the most crucial one in our current times, and why we are seeing such ridiculously large gains in housing costs in the past few decades after a century of housing costs remaining fairly constant.

Agreed. As you said, the solution to that is either a Georgist Land Value Tax or a Land Appreciation Tax, not a blanket wealth tax.

I'm also fully in favor of wealth taxes, especially since the US has weakened estate taxes and other checks that would help mitigate increasing inequality.

I started mentioning land, as it's the most clear problem of idle wealth. But hugely unequal distribution of wealth also results in slower economic growth and overall less economic activity than if there is more equal access to capital and resources. Capital strikes can be just as effective as labor strikes, and though they don't get much attention they can cause great harm.

Re: Modeling a Wealth Tax

#124

Post by cltby »

hkhanna wrote: post #78

I'm not necessarily in favor of a wealth tax, but this essay is deeply flawed for the many reasons identified in other comments. What struck me is that I showed it to my partner who has no formal finance training and she quickly identified the major flaw that seems to have escaped Paul Graham: a wealth tax is a percentage of the dollar value of wealth, not a percentage of the number of shares of stock you own. The do…

> a wealth tax is a percentage of the dollar value of wealth, not a percentage of the number of shares of stock you own.

If I expropriate 5% of your wealth, and ~100% of your wealth is in shares of stock, what percent of your shares have I taken?

Re: Modeling a Wealth Tax

#125

Post by bhupy »

bitcurious wrote: post #26

I'm highly skeptical of the claim that such tax would discourage startup founders. Wealth tax proposals I've seen don't kick in until $50 million or $100 million. This means that there is a floor on how "poor" the government can make you via a wealth tax. This has two implications: 1. Most "successful" startup founders don't break that threshold of personal wealth. 2. For most startup founders, the startup is the onl…

> money earns money. A conservative drawdown of 3% pay the most commonly proposed wealth tax while still leaving you wealthier at the end of the year.

That is only true if your wealth is in diversified ETFs or funds. That is not where most of the wealth of super-rich founders is. If 90+% of your wealth is in a single company (I.e. the one you founded), then there's no guarantee that this wealth will necessarily appreciate on its own (esp relative to inflation).

Re: Modeling a Wealth Tax

#126

Post by logicchains »

nemo44x wrote: post #109
bitcurious wrote: post #26

I'm highly skeptical of the claim that such tax would discourage startup founders. Wealth tax proposals I've seen don't kick in until $50 million or $100 million. This means that there is a floor on how "poor" the government can make you via a wealth tax. This has two implications: 1. Most "successful" startup founders don't break that threshold of personal wealth. 2. For most startup founders, the startup is the onl…

> Wealth tax proposals I've seen don't kick in until $50 million or $100 million. This means that there is a floor on how "poor" the government can make you via a wealth tax. That’s just the starting point. Once people begin to figure out how to avoid it or have been tapped then the qualifier will be lowered to 40m. And then eventually 30m and do on until anyone above average is paying it. And then anyone above media…

This is exactly what happened with the US federal income tax. It was originally only a small amount, and only on the wealthy. Now it's gradually been expanded to everyone.

Re: Modeling a Wealth Tax

#127

Post by austhrow743 »

Miner49er wrote: post #81
rel2thr wrote: post #67

Earlier quoted context omitted.

I don’t think Paul forgot, it’s why he phrased it in terms of stock not dollars. If you start a company and hold on to ownership for 60+ years, you could be forced to sell X% to cover the wealth tax over the years

Yes, but at the end you'll still have more real value in that stock then you had at the start, assuming your stock at least performs equal with the market.

Which is good and fine if all you want is real value. What you wont own any more is your company.

Re: Modeling a Wealth Tax

#128

Post by supercanuck »

logicchains wrote: post #107
supercanuck wrote: post #86

Earlier quoted context omitted.

Government Spending is included in GDP and government services have value to a society. It is not simple just a management fee because instead of being used to purchase a luxury goods it may be used to improve healthcare, infrastructure or regulating industry. If it wasn’t for government investing into DARPA none of these startups would even exist.

In the US the vast majority of government spending is on defence and welfare: https://www.cbo.gov/publication/56324 .

DARPA was defense.

Re: Modeling a Wealth Tax

#129

Post by arnvald »

stickyricky wrote: post #96
barretts wrote: post #33

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.

Why does asset growth matter if you're taking n% no matter what? Edit: After reading the responses, I think people are confusing themselves with dollar amounts. If I have 100 units of X. The government takes 1 unit in the first year, 0.99 units the next, and so on. Over time my total number of units decreases. The notional value of those units can fluctuate but the absolute number of units owed to the government rema…

Let's say you have 1% wealth tax and $1,000.

Without asset growth, after 1 year you have $990. If you include let's say 5% asset growth, after 1 year you have $1,000 * 1.05 * 0.99 = $1,039.

Then after another year, without growth you have $980.1 With %5 growth you have $1,040 * 1.05 * 0.99 = $1,080.

So the article claims that with 1% wealth tax you'll lose 45% of your assets over time. With any growth above 1% every year, you will actually at least break even.

Re: Modeling a Wealth Tax

#130

Post by MisterBastahrd »

tnr23 wrote: post #63
bitcurious wrote: post #37

Earlier quoted context omitted.

>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.

That was just an example to make the point clear which varies from jurisdiction to jurisdiction. But even in your 15% example the long term effects are very significant.

Your point has been noticed time and time again. It's called "a nice problem to have." A man who is living paycheck to paycheck would love to be able to just dip into his investments and toss away $20K without at all affecting his lifestyle.

Money is power. I can't request a sit-down meeting with my own senator or local representative and expect my request fulfilled. Paul Graham can, and so can everyone in his wealth class. This is a problem, because Graham is not a constituent of either of them.

Post reply on HN