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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#141

Post by selectodude »

logicchains wrote: post #120
AussieCoder wrote: post #88

Every proposal I have seen kicks in after $100m. That's a level of wealth where even paying a 5% tax is likely to result in an annual net increase in wealth, as when you have that amount of money to invest achieving 5%+ returns is not unusual. The net result is that wealth would still increase, just at a slower rate. Additionally, even amongst the general population, let alone startup founders, the number of people w…

>What this means is that people arguing against a wealth tax are happy to disadvantage 330m people to protect the wealth of a low number of thousands. By not giving 1% of your wealth to Africa you're disadvantaging a billion people to protect the wealth of one. It's not a disadvantage to someone that they're not getting a part of somebody else's wealth; we're not born with some divine right to other people's money.

The ability to have 100 million dollars is entirely due to the enforcement of laws that we all agree on. I think we should re-frame the wealth tax as guillotine insurance.

Re: Modeling a Wealth Tax

#142

Post by simonh »

foogazi wrote: post #97
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.

Asset growth does not matter here since the wealth tax is setup as a percentage - the government will still take 45% over time

Only if your wealth is so far above say $50m that a few tens of millions is completely inconsequential. If it's closer to $50m, then it will be a whole lot less than 45% and possibly nothing.

Re: Modeling a Wealth Tax

#144

Post by ralmidani »

nybble41 wrote: post #114
ralmidani wrote: post #71

I see no reason to be alarmed. It’s highly unlikely the government would be taking from your stock directly. Requiring shareholders to pay cash equivalent to a percentage of their shares is reasonable, although with hyper-growth companies that don’t pay dividends, this could get tricky. Maybe it would incentivize more investment in dividend-paying companies? Also, FWIW, I think it would be better to impose a wealth t…

> It’s highly unlikely the government would be taking from your stock directly. It makes no difference whatsoever whether they take the stock directly or force you to sell the stock in order to pay the tax in cash. The end result is the same—your stock is reduced by the amount of the tax.

That is a valid concern which I acknowledged in my comment. It would probably result in investors seeking investments with an expected return that offsets the wealth tax by a decent margin, while also paying dividends. I am by no means an investment expert, but maybe those are the kinds of investments we should be encouraging people to invest in anyway? Hyper-growth, overvalued companies are often great investments, until they’re not.

Edit: if we don’t want the government picking winners and losers, another option could be deferred taxation; when you sell, you pay taxes for however many years you held the stock.

Re: Modeling a Wealth Tax

#145

Post by crispyporkbites »

dahdum wrote: post #115
crispyporkbites wrote: post #60

Earlier quoted context omitted.

This has been downvoted, can someone add a counter-argument for this? I.e. why should someone with higher wealth be able to pay less tax (in absolute and relative figures) than someone with lower wealth?

Possibly because your example penalizes frugal savers, or that your concern is focused on people making $100k+/yr.

Frugal savers don’t really help the economy though. If we all were frugal nothing really moves.

And this would apply to people earning 10k as much as people earning 100k

Re: Modeling a Wealth Tax

#146

Post by bluelu »

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…

That's not true. In some cantons, the very rich get extra deals, called Lump-sum tax, independently of their revenues. E.g. the Ikea founder only paid around 165000$ in total taxes in 2014 on a fortune of 46.5 billion US $ and all his revenues which he had.

Source: https://www.20min.ch/story/so-wenig-steuern-zahlte-der-ikea-...)

Re: Modeling a Wealth Tax

#147

Post by erichocean »

bitcurious wrote: post #131
nemo44x wrote: post #109

Earlier quoted context omitted.

> 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…

>The state will, as always, become reliant on it and find ways to expand it to wield more power and pay debts that were taken on to “collect/spend in advance” as they’ve done countless times. This hasn't been true for the income tax [0], nor the capital gains tax [1], nor (at least in Silicon Valley) for real estate taxes[2], which are closest to a wealth tax. It's a reasonable thing to consider, but given the eviden…

> This hasn't been true for the income tax

Well that's false, the income tax in the United States originally was promised only to ever apply to the ultra-rich. Now every tax payer pays it.

Re: Modeling a Wealth Tax

#148

Post by cascom »

ralmidani wrote: post #71

I see no reason to be alarmed. It’s highly unlikely the government would be taking from your stock directly. Requiring shareholders to pay cash equivalent to a percentage of their shares is reasonable, although with hyper-growth companies that don’t pay dividends, this could get tricky. Maybe it would incentivize more investment in dividend-paying companies? Also, FWIW, I think it would be better to impose a wealth t…

I honestly think your underestimating the amount of wealth stored in private companies, real-estate, art and other il-liquid assets

Re: Modeling a Wealth Tax

#149

Post by I_am_tiberius »

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…

Switzerland can afford taxing based on wealth because other taxes are very low (e.g. only ~20 % of tax on your salary).

Re: Modeling a Wealth Tax

#150

Post by crispyporkbites »

Applejinx wrote: post #100
crispyporkbites wrote: post #13

Wealth should be taken into account when income tax is calculated. 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 affo…

"Someone's wealth should not be eroded by tax" Why not? They are paying for something. Should someone's wealth not be eroded by rent? The cost of food? Absolutely someone's wealth should be eroded by tax. If they're so damn clever they'll make more. If they're not, the erosion will quickly diminish along with the wealth, making their future efforts much more significant. Lazy shiftless wealth absolutely should be ero…

I think it’s hard to get people to vote for a tax that will take money they have already acquired away from them. Reducing their potential for future earnings seems a lot more realistic to me.
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