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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#221

Post by clairity »

bhupy wrote: post #125
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 appre…

no, in a similar vein to my other comment, any founder who's reached millions in personal gain from their single, undiversified startup, will begin to employ financial strategies to diversify some of that gain into other instruments to reduce risk. there's a whole industry eager to help the rich and the getting rich do so.

Re: Modeling a Wealth Tax

#223

Post by cowpig »

czbond wrote: post #202

Unpopular opinion: Near 50% of American pay ZERO tax whatsoever. The top 10% of all Americans pay 69% of all taxes currently. This is a point 'left out' of current discussions. How about instead of increasing entitlements and stealing more from people that created wealth - we lower the size of the government spending UNTIL it matches where most people pay for the services received in a more scaled manner. https://tax…

The wealth tax is aimed at the billionaire class.

That class paid less than the working class in taxes last year[1].

[1] https://www.washingtonpost.com/business/2019/10/08/first-tim...

Re: Modeling a Wealth Tax

#224

Post by nybble41 »

mpolichette wrote: post #165

It makes it seem really bad when you say "Government takes". The truth is, you're contributing back to people and the system which let you make and run a business that makes millions starting in your 20s.

> It makes it seem really bad when you say "Government takes".

Sure, but it's also perfectly accurate.

> … you're contributing back …

You contribute back by running the business successfully and providing things that people value. Any taxes you pay are above and beyond that. Society creates government, not the other way around, though the government loves to blur the line between itself and society and thus claim credit for what people have created on their own. The best way that the government can contribute to the success of any business, short of directly harming one party to enrich another, is simply to stay out of their way and let them get on with actually running the business.

Re: Modeling a Wealth Tax

#225

Post by thaumasiotes »

lordnacho wrote: post #179
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…

You'd borrow against it, giving a bank the shares as collateral.

Now you're paying interest.

(If you're planning to wink at the bank, pay nothing, and let them keep the stock, that's the kind of thing that won't work if it becomes common. At that point, people will point out that you sold stock to the bank and didn't pay the income tax.)

Re: Modeling a Wealth Tax

#226

Post by Retric »

bhupy wrote: post #157
another-dave wrote: post #108

Earlier quoted context omitted.

Exactly — I've always thought that what drives multi-millionaires and billionaires isn't really the monetary value of the extra money that they make. To the extent they care about money at all anymore, surely it's only as a relative measure of success? I can't see many people that have already accrued personal wealth of $50M but choose to keep working suddenly being turned off because of a wealth tax.

> I can't see many people that have already accrued personal wealth of $50M but choose to keep working suddenly being turned off because of a wealth tax. That's not the argument. If you accrue a wealth of $50M because you own half of your $100M company (or 100% of your $50M company), then a wealth tax will — over time — force you to give up ownership in your own company. An income tax or a capital gains tax on the ot…

A profitable company can pay dividends which would easily cover a wealth tax. Owning 50M worth of stock in an unprofitable company with zero other income sources or investments is a significant sign you should diversify anyway.

Re: Modeling a Wealth Tax

#227

Post by thewarrior »

I think there should first be a disclaimer that Paul is actually quite wealthy and would be personally affected by a wealth tax.

I don’t see how a wealth tax would have prevented ViaWeb or YC from coming into existence. Unless the incentives to do these things are purely financial which I’m sure is not what his previous essays have indicated.

Re: Modeling a Wealth Tax

#229

Post by [deleted] »

dpeterson wrote: post #135
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…

I wish you had made this as a top level comment. This should be at the top, not the pro wealth tax comment. Like you said, the net always gets wider and wider.

[deleted]

Re: Modeling a Wealth Tax

#230

Post by TheCondor »

bhupy wrote: post #198
Certhas wrote: post #171

Earlier quoted context omitted.

The money ears money thing is key. A wealth tax that equals the money you can earn from having money would prevent runaway inequality due to the "rich getting richer" effect. S&P 500 has a long term annualized return of 10%. If you have a 5% wealth tax on stock you have in S&P 500 then you are still earning 5% returns (well above long term average inflation) without actually lifting a finger.

But none of the people you are trying to target with the wealth tax have their holdings in the S&P500. Instead they have close to 100% of their holdings in a single asset represented by the more diversified S&P500. There is no guarantee that the single individual super-wealthy founder whose wealth derives from the ownership of their own company will appreciate at an annualized rate of 10%. The two most pervasive myth…

They aren’t diversified?!
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