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Modeling a Wealth Tax

paulgraham.com

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Re: Modeling a Wealth Tax

#241

Post by em500 »

I_am_tiberius wrote: post #149
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).

The Netherlands also has a wealth tax. Other taxes are not low (income tax of around 37%-49%, 21% VAT).

Re: Modeling a Wealth Tax

#242

Post by tengbretson »

If our government doesn't operate on a balanced budget, and we seem more than happy to fund out current existence with endless debt why should a wealth tax be seen as anything but punitive?

Re: Modeling a Wealth Tax

#243

Post by GCA10 »

We already have extensive experience in the U.S. with a particular type of wealth tax -- called property taxes. I've been paying them in California for 23 years, and they haven't ruined me yet. (The nominal rate on those tends to be about 1%, too.)

Many people with personal wealth of $50m+ start steering significant money into foundations of their own devising. There's a good debate to be had about whether society is better off with the richest people creating their own philanthropy and social-reform strategies, or having them hand over the $$ to the government for its version.

I'd rather see individual strategies proliferate, on the belief that the government doesn't always know best. But the idea that a 1% tax will bring ruin on successful entrepreneurs grossly underestimates the way that fortunes keep growing.

Re: Modeling a Wealth Tax

#244

Post by Schweigi »

bluelu wrote: post #146
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-... )

The lump sum tax is only possible for non-citizens, who do not have direct W2 income from Switzerland. Local governments (if the state allows it) can use it as a shortcut to estimate the tax amount. Nevertheless wealthy Swiss citizen don’t leave Switzerland either. Probably also because there is no capital gains tax which offsets the wealth tax easily.

Re: Modeling a Wealth Tax

#245

Post by thatfrenchguy »

This means the government only takes the money of non growing companies. It’s encouraging the new to replace the old, which is a good thing.

Inequality is à at stupid levels in the US currently and infrastructure is crumbling ? Don’t we want the rich to participate in society ?

Re: Modeling a Wealth Tax

#247

Post by enragedcacti »

mrob wrote: post #56
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.

All breakpoints in tax systems contribute to market inefficiency, because they incentivize manipulating your finances to stay below breakpoints instead of maximizing efficiency. It would be better to apply a flat wealth tax and correct for the regressive effect of decreasing marginal utility of money with UBI.

if you make $100,000,001 under a 100 million wealth tax at 1%, you pay $.01, not $1,000,000.01 so there is no point trying to stay under 100 million.

Further, a flat wealth tax has immense inefficiency in that it forces people with $100s or $1000s of dollars to their name to calculate their wealth for a $1-$100 payout to the government rather than do something productive with their time.

Re: Modeling a Wealth Tax

#248

Post by kpmcc »

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…

States like the US can just spend in advance without taxing, there’s no necessary relation. We’re not on the gold standard anymore. The point of a tax isn’t to pay for things, it’s to attempt to control inflation and the money supply, and to combat inequality. The idea that a state (read nation, for US states things are different) would become reliant on such a tax to pay for things doesn’t hold water. It may become ‘reliant’ on it as a means to reduce inequality but that’s another matter.

The avoidance issue is a big one and the mechanism of making sure people pay is at least as important as where one sets the floor. Cross border capital flows can be pernicious.

Piketty gets into how different rates of capital accumulation create huge rifts between people who own appreciating assets like land and equities and people who don’t who primarily earn wages. The idea behind the wealth tax is to try and narrow the rift.

Re: Modeling a Wealth Tax

#249

Post by logicchains »

comicjk wrote: post #231
I_am_tiberius wrote: post #149

Earlier quoted context omitted.

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

That's a good thing. Taxing wealth more, and income less, helps equalize wealth disparities over time.

> That's a good thing. Taxing wealth more, and income less, helps equalize wealth disparities over time.

It also slows economic growth over time, because most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth.

Re: Modeling a Wealth Tax

#250

Post by droobles »

What would be the implications for a lifestyle businesses that does not intend to scale?

It seems that a rapidly growing startup would be constantly investing its wealth, but a successful lifestyle business makes relatively close to the same income every year with little growth. Would the lifestyle business' wealth then be chipped away at year after year?

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